If your business uses blockchain technology, you should be familiar with the concept of smart contracts. On the other hand, smart contract security audits may not seem very popular due to their complexity and high resource requirements. However, smart contract security audits should be necessary for the overall enterprise security strategy of protecting sensitive information from hacking attempts.
The appearance of a single bug in smart contracts can lead to the failure of the entire structure and huge loss of revenue, proven time and time again by historical events.
An introduction to smart contract security audits
Similar to penetration testing procedures , smart contract security audits involve the detailed examination of all components and functionality of the smart contract code, its purpose, and the analysis of interactions with other cryptocurrencies. The main objective of security audit is to analyze security issues, hidden vulnerabilities, smart contract audit errors and misconfigurations and suggest the best corrective measures.
It is important to address the security aspect of smart contracts, as they usually deal with sensitive customer information or financial data, as seen in the concrete examples above. As a result, smart contract security audits are complicated as tests are performed to detect vulnerabilities in individual smart contracts and contracts that interact with each other, as well as existing integrations with other third-party software that may be compromised. introduce foreign vulnerabilities into the system. This is also why smart contract security audits contain both running tests and manual code analysis to cover all security perspectives.
What types of projects require smart contract security audits?
Any business that uses blockchain technology will benefit from smart contract security audits, but let’s take an in-depth look at the specific types of projects that necessarily require such security testing:
DeFi projects
Smart contracts used in DeFi projects have become increasingly complicated and can benefit from a comprehensive security audit. DeFi, or decentralized finance, generally refers to a set of financial applications connected through blockchain technology. Banks use this service to provide traditional banking institutions with additional security, privacy, and other provisions for lenders and borrowers.
Token Contracts (Crowdsales)
Smart contract security audits should also be performed on major protocols and using different programming languages such as JavaScript, C++, etc., to capture all possible vulnerabilities in different applications. Crowd-selling usually includes the sale of token contracts by forming a basic contract that dictates the rules and regulations. The activity is taken over to meet the financial needs of a company’s project, following which the token providers are shareholders of the project.
Wallets (dApps)
A decentralized application, or dApp, works like a wallet and ETH for all transaction fees. Their main characteristic is that they are operated and controlled by decentralized protocols such as Ethereum. They also involve complex smart contracts that require proper auditing practices and security measures to prevent financial loss.
4 Types of Smart Contract Audit Services
Smart contracts can vary depending on the decentralized applications that use them, so it’s important to understand the unique points of each and design security audits accordingly for maximum vulnerability discovery.
1. Complete security audit
This covers all aspects of the smart contract, including its interaction with other smart contracts and third-party applications. First, a combination of automated and manual testing tools are used to uncover potential vulnerabilities for basic exploitation, followed by more in-depth verification. Manual testing techniques are important here. They help to understand the context in which the smart contract operates and its objectives, which should be kept in mind before testing security issues. Otherwise, solidity contract audit simply using automated testing tools runs the risk of generating “false positives”.
2. Basic Security Audit
This type of audit takes the least amount of time and is conducted by a single tester as it was designed with the requirements of standard token contracts such as ERC20 and ERC721 in mind . It does not go into the contract in detail and covers basic aspects of operational requirements. Companies with little involvement in applications based on blockchain technology can choose this type of test procedure.
3. Intermediate audit
Usually used for DeFi projects, it is primarily used to review the complexities involved in its smart contracts and ensure that the right levels of protection are implemented for customer data and their finances.
4. Round-the-clock auditing
If your project is still running through the development cycle, has a defined map of milestones, and requires multiple iterations to overcome its obstacles, this type of audit best suits your needs. Testers will walk your app through its development cycle for periodic reviews and security recommendations before moving forward.
With this, you should have a fair idea of the type of projects that can benefit from smart contract security audits and the types of tests that should be designed to meet the appropriate security requirements.
