Malicious smart contract assaults that auditors can quickly spot

Due to the widespread adoption of blockchain technology and smart contracts by businesses, it is now more crucial than ever to provide reliable security audits.

Businesses may safeguard their contracts and assets by identifying and thwarting malicious assaults.

This article will discuss the many attacks that a gang of criminals can launch against smart contracts. In order to assist you secure your contracts, we'll also look at actual attack examples.

Smart contracts: what are they? Recognize the advantages of this technology.

How do smart contracts work? They are electronic contracts that anybody can utilise to expedite, confirm, or enforce the negotiation or fulfilment of an agreement. Smart contracts can be used for a variety of things, including controlling information, property rights, and financial transactions.

In 1996, Nick Szabo originally suggested smart contracts. He defines a smart contract as "a computerised transaction mechanism that performs the terms of a contract." Smart contracts were created by Szabo to offer more security than conventional contracts and to lower contracting expenses.

The idea of smart contracts has since been improved upon and explored further by other researchers and developers.

Launched in 2015, Ethereum is a decentralised platform for smart contracts. Decentralized exchanges, games, and prediction markets are just a few of the decentralised applications that Ethereum has developed.

There may be some advantages to using smart contracts. They can automate contract execution first. By doing away with the need for middlemen like banks or lawyers, this can save time and money.

Second, compared to conventional contracts, smart contracts may offer higher security. They can be used to enforce contracts and create tamper-proof transaction records.

Finally, the use of decentralised applications can be facilitated by smart contracts. These applications can be put into use on a blockchain by programmers to build systems that are untrustworthy and outside the control of any entity.

The types of attacks that can target smart contracts

We can identify at least five types of malicious attacks that criminals can carry out on Smart Contracts:

Code manipulation

DoS attacks

DDoS attacks

sibyl attacks

replay attacks

The subsections below take a closer look at each of these typical attacks.

code manipulation

Code is king when it comes to smart contracts. It should therefore come as no surprise that code tampering is one form of attack that hackers can execute. This is when unauthorised changes, harmful functionality additions, or the removal of security safeguards are made to the code.

The following are some typical attack types that can be caused via code manipulation:

Add malicious code that enables contract payments to be stolen by the attacker

Add code that enables the attacker to influence or alter the contract's behaviour.

Discard security precautions that limit access to contract funds or data by unauthorised parties

Add glitches that make the contract ineffective or fail

These assaults can be challenging to identify, particularly if the perpetrator is good at covering their tracks. However, there are some obvious indicators that a contract has been shortened that an auditor might check for.

The following are some of the more widespread signs of code modification:

Someone may have modified or added code to the contract that is incompatible with the rest of the contract code.

Unusual or unexpected actions during the contract's execution

Previously existing code that has been removed or commented

A code review can be used to corroborate an auditor's suspicions that a contract has been tampered with. This entails carefully going over the contract code to search for adjustments or odd behaviour.

DoS attacks

Online DoS (Denial of Service) attacks are a widespread occurrence. The goal of a DoS attack is to prohibit authorised users from accessing the contract by overloading the system with requests. They can exist in both Web2 and Web3 environments. Among the strategies for defending your smart contract from DoS assaults are:

Set a minimum number of confirmations necessary for transactions.

Don't overload the system with too many transactions at once.

Use an oracle to keep an eye out for attacks on the network, then terminate the contract if required.

DDoS attack

In a DDoS assault, several computers bombard a target with traffic or requests. The target might be overloaded as a result, crash, or stop functioning.

DDoS attacks can be successful against smart contracts, although they are frequently used by criminals to bring down online services.

Although there are several defences against DDoS assaults, having a solid security strategy is crucial. This involves utilising firewalls, intrusion detection systems, and secure passwords.

Additionally, keep an eye out for odd behaviour on your network, and create a backup strategy.

Call your auditors right away if you think a DDoS assault is taking place. They will enable you to determine whether the assault was successful and stop a repetition.

sibyl attacks

The Sybil attack is a frequent kind of assault on smart contracts. A Sybil attack involves the creation of several identities by the attacker in order to take over a system. Criminals can accomplish this, for instance, by setting up several accounts.

The attacker has the ability to gain access to more resources or data or perhaps take control of the whole system.

These attacks must be recognised by auditors, and they must know how to spot them. Finding patterns in the behaviour of system members is one technique to achieve this.

A Sybil assault may be indicated by abrupt spikes in new account activity. Other techniques, such network analysis, may also be used by auditors to spot suspect activities.

It is critical to defend the system if a Sybil assault is suspected. This could entail altering security protocols or tightening up participant activity monitoring. In some circumstances, it could be necessary to make modifications while the system is momentarily offline.

replay attack

An attack that a hacker might use against Smart Contracts is a replay attack. To mislead the system into processing it once more, an attacker records a transaction and repeats it later.

Hackers can accomplish this by changing or repeatedly streaming the original transaction.

Utilizing a special identifier for each transaction is one technique to defend against replay attempts. The transaction data can contain a timestamp or a random number.

To avoid replay attacks, keep all system transactions in a tamper-proof ledger.

How can auditors identify these attacks?

Smart contract auditors are able to identify all of the aforementioned attacks during a query. They are able to identify altered smart contract code or vulnerabilities in the system that can be used by criminals.

Furthermore, auditors can assist you in identifying the hazards connected to your smart contract. They can also offer suggestions on how to lower such risks. One of the greatest ways to guard your smart contract against malicious assaults is to hire a qualified auditor.

From an auditor's perspective, replay attacks are also simple to spot. Someone might be attempting to repeat the assault if they have been updating your smart contract history.

Counting the addresses that communicate with a Sybil assault's smart contract allows auditors to identify the attack. If there are an excessive number of addresses, a malicious action is probably being attempted.

Examples of real-world attacks on smart contracts

Numerous high-profile assaults against smart contracts on the Ethereum network have cost users and investors a significant amount of money.

The DAO breach, in which a hacker stole more than $50 million worth of $ETH, is the most well-known attack. The thieves were able to get this outcome by taking advantage of a flaw in the smart contract's architecture.

Other noteworthy assaults include the Parity Wallet hack, in which a hacker stole ethereum valued at more than $30 million. We should also bring up the Enigma ICO incident, in which a hacker stole Enigma tokens valued at over $500,000 from the system.

Less media attention has been paid to numerous additional attacks on less well-known smart contracts.

Compound Finance hack is one such attack. A hacker in this instance took advantage of a weakness in the Compound Finance smart contract. As a result, COMP tokens worth more than $80 million were produced.

A hacker produced BZRX tokens worth $55 million by taking advantage of a flaw in the bZx protocol.

These are only a few of the many ways that smart contracts have been attacked. Some of these incidents were covered by the media, but others got less publicity.

While previous assaults have boosted awareness of smart contracts, dishonest individuals can still take advantage of a number of flaws.

Conclusion: The Importance of Hiring Smart Contract Auditors

During an inquiry, smart contract auditors can spot all of the aforementioned attacks. They are able to spot hacked system vulnerabilities or updated Smart Contract code.

Additionally, auditors can assist you in determining the risk associated with your smart contract and can provide recommendations for reducing that risk. One method to safeguard your smart contract from dangers is to hire a qualified auditor.

The ones we listed are just a few types of smart contract attacks, it is vital to remember that. Employing a qualified auditor to check your smart contract for any weaknesses is crucial. By doing this, you can help yourself stay safe from expensive attacks.