How to audit smart contracts?

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Blockchain technology is changing the game in all walks of life, and smart contracts are a key part of this process. Smart contracts help reduce costs by eliminating third-party intermediaries to ensure trust between parties, while also increasing transparency. If you’re going to write a smart contract, it’s critical that you audit the code to make sure it works correctly — and that there aren’t any bugs or security holes. This guide will walk you through the basics of smart contract audit services and some common smart contract vulnerabilities.

Part 1: Why audit your smart contracts?

Smart contracts are important for many reasons. They can help you automate business processes and make them more efficient, saving time and money. But the biggest reason it’s so popular is that it reduces the risk of fraud by removing human error. However, these benefits come at a price: it is easy to make mistakes when developing smart contracts. A flawed codebase can crash your entire system and even be vulnerable to hackers! You may have heard about hacking. You may have heard about Ethereum-based tokens being hacked. The hacks were caused by vulnerabilities in smart contracts that allowed hackers to steal millions of dollars worth of cryptocurrency stored in those contracts.

Part 2: How to Start an Audit

Before you start an audit, you should first conduct a security review. in order to identify any issues and vulnerabilities in the smart contract.

The next step is to understand the business logic of the contract, you should understand why it was created, what problem it solves for the user, and how it works with other contracts on the blockchain .

After that comes a technical architecture analysis: looking at all the pieces involved in writing and deploying this code, smart contract audit and understanding how they are implemented in programming languages ​​like Solidity.

Finally, do threat modelling to see how the different parties (users/end users) interact with the system.

Part 3: The Different Stages of Smart Contract Auditing

The different stages of a smart contract audit include:

Determine the goals and objectives of the audit:

In this step you set the goals and objectives of the smart contract audit.

Determine the scope of the audit:

In this step, you collect all the assets included in the audit scope to ensure that nothing is missed.

Audit plan:

An important phase of an audit is planning, which allows the audit to be done efficiently.

To audit:

The real work, trying to find bugs in the code of the smart contract.

To write an audit report:

Now that all your hard work is over, it’s time to report on what you found during the audit.

Part 4: General aspects of the test

There are many different types of tests, but the most important thing to remember is that you shouldn’t trust code you haven’t tested. You can test your smart contract code in a number of ways, including:

• Test in a sandbox environment (like Remix)
• Test on a testnet (like Rinkeby)

• A private blockchain network (like Ganache) specially designed for testing purposes

Part 5: Basic Security Considerations

You are accountable for maintaining the security of your code as a smart contract developer. You can only do this to protect your users’ money.

There are several fundamental procedures that must be followed to maintain effective security.

• Use safe coding practices

• Use a secure development environment

Part 6: Common Ethereum Vulnerabilities

Ethereum smart contracts are vulnerable to some hacks and attacks. The most common vulnerabilities are:

Reentrant: This means that a malicious contract can call another contract multiple times, exhausting the resources of the victim contract.

Integer overflow/underflow: This is the result of an arithmetic operation whose value is outside the expected range. This can be exploited to send more or less ETH than expected.

Dependent on timestamp : This means that the contract relies on the current timestamp to determine certain conditions. This can be exploited to manipulate the state of the contract.

We will discuss some common vulnerabilities in the following points. You can also check out my other articles for more information on reentrancy and integer overflow/underflow vulnerabilities.

Part 7: Storage Variable Vulnerability

One of the most common security holes in Ethereum smart contracts is the use of insecure storage variables. These variables can be used to store sensitive information, such as private keys and passwords, which can easily be compromised if not properly secured.

There are a few different ways to protect stored variables, such as using a library like SafeMath (Solidity has SafeMath built in since 0.8), which ensures that all math operations are done in a safe manner.

Other methods include using a hardware security module (HSM) to store variables, or using a multi-signature wallet to protect private keys. The best way to prevent storage vulnerabilities is to use a combination of these methods, as each method has its own strengths and weaknesses. By using multiple layers of security protection, it is more difficult for an attacker to compromise the data stored in the smart contract.

Part 8: Misuse of Transfers and Sends

When it comes to smart contracts, there are a few key things to keep in mind in order to avoid any misuse. First and foremost, it is important to remember that smart contracts are immutable. This means that once they are deployed, they cannot be changed. Therefore, it is crucial to double-check and triple-check your code before deploying.

A common mistake that can lead to misuse of smart contracts is confusing transfer and send functions. These two functions look similar, but they actually do different things. transfer can be used to transfer ownership, while the send function is used to send assets.

In short, the misuse of smart contracts can have serious consequences. Before deploying your code, bsc smart contract audit be sure to double check and make sure you understand the difference between the transfer and send functions.

Part 9: Function Visibility Vulnerability

When it comes to the visibility of functions in smart contracts, there are two main types of vulnerabilities that can occur. The first type of vulnerability is that functions that should not be made public are marked as public. This can happen if the function is not properly marked as private, or if the visibility is accidentally set to public. This type of vulnerability can be exploited by anyone with access to the contract and can lead to the contract being broken.

The second type of vulnerability is when a function is made private when it shouldn’t be. This can happen if visibility is accidentally set to private, or not properly marked as public. This type of vulnerability can be exploited by anyone with access to the contract and can lead to the contract being broken.

Part 10: Integer Arithmetic Errors

When you are writing smart contracts, it is important to be aware of integer arithmetic errors. These errors occur when you perform calculations with integers that are too large or too small.

For example, let’s say you are trying to calculate the total value of all tokens in a smart contract. The value of each token is stored as an integer. If there are more than 2,147,483,647 tokens in the contract, the total value will be too large to be fully represented by one integer variable. This will cause an error.

To avoid this, you can use a library like SafeMath (Solidity has SafeMath built in since 0.8), which helps you do integer arithmetic safely.

Part 11: Loops and Recursion Vulnerabilities

As we have seen, loops and recursion can play a huge role in programming. However, they can also be abused to create vulnerabilities.

An example of this is the so-called “infinite loop”. This is when a program gets stuck in a loop and can never exit. This can cause the program to crash, or worse, it can consume all the resources of the system it is running on, creating a denial of service attack. This is bad for smart contracts as it can lead to losses for users.

Another example is when a program recurses too deeply. This can also cause a crash, or cause the program to run out of memory and be forced to terminate.

Both of these vulnerabilities can be exploited by attackers to cause problems for the system or its users. Therefore, it is important to be aware of them and take steps to prevent them from being exploited.

Part 12: Prevention, Detection, Mitigation and Remediation .

**Prevention:** The best way to prevent smart contract issues is to have a thorough and complete testing process. This should include unit testing of the contract code, as well as functional testing of the contract in the intended environment. It is also important to have a clear and unambiguous specification for the contract so that all parties involved can understand exactly what the contract is supposed to do.

**Detection:** Problems with smart contracts can often be detected by monitoring the performance of the contract and comparing it to expected behavior. If there are any discrepancies, this may indicate a problem with the contract. Static analysis tools can also be used to check for errors or potential vulnerabilities in contract code.

** Mitigation: ** If a problem is discovered in a smart contract, action must be taken to mitigate the problem. This may involve changing the contract code to fix the problem, or it may involve changing the way the contract is used. For example, if a contract is found to be vulnerable to a particular attack, the problem may be mitigated by changing how the contract is used so that the attack is no longer possible.

**Remediation:** If a problem cannot be mitigated, it may be necessary to take steps to remedy the problem. This might involve replacing the contract with a newer version that doesn’t have the same problems, or it might involve removing the contract from use entirely.

Part 13: Automated Tools for Detecting Vulnerabilities

As smart contracts become more commonplace, so does the need for automated tools that can scan for vulnerabilities in these contracts.

There are many different automated vulnerability scanners out there, each with their own strengths and weaknesses:

Mythril is a popular choice that uses symbolic execution to analyze contracts and find potential vulnerabilities.

Oyente is another popular option that uses static analysis to find potential problems.

Securify is a newer tool that uses a combination of static and dynamic analysis to find vulnerabilities.

These scanners aren’t always 100% accurate, so it’s important to do your own testing and human review.