What is a smart contract audit?

smart contract attack

A smart contract is a self-executing line of code that follows instructions set on a blockchain network. These contracts enable users to conduct non-open, transparent transactions on the blockchain without being bound by a central authority or any legal system.

Due to their utility, they have become the building blocks of complex decentralized applications such as DeFi and DExs, ICOs, voting protocols, and supply chain management.

As smart as they may seem, if any security flaws or vulnerabilities are detected in the code, smart contract audit they can do huge damage.

Typically, a smart contract may perform its designed function, but the existence of a vulnerability would allow hackers to build code that interacts with the smart contract to transfer funds.

Known or standard vulnerabilities in smart contracts

Competitive Hazards: Activities are not performed in a predetermined order. In smart contracts, competition hazards can arise when an external contract takes over the flow of control.

Fork Attack: In this case, some functions are called repeatedly before the first function call is completed. One of the key solutions is to prevent concurrent calls in certain functions, especially when checking for external calls.

Cross-functional competition hazard: Describes similar attacks of two functions that share the same state and have the same solution.

Transaction Order Dependency (TOD) Problem/Frontend Running Problem: Another competition hazard that affects transaction order within a block. By manipulating the order of transactions, one user can benefit from another.

Database manipulation problem: This attack is related to smart contracts that rely on external data as input. If the entered data is incorrect, it will still be entered and executed automatically. Relying on database protocols that have been hacked, bsc smart contract audit deprecated, or have malicious intent can have catastrophic effects on all processes that rely on them.

Short address attack/parameter problem: This type of attack is related to EVM. This happens when a smart contract accepts incorrectly populated parameters. In this way, an attacker can exploit a miscoded client by using a crafted address that mis-encodes the parameters before including them in the transaction.

Smart Contract Audit

Similar to regular code auditing, the security of a smart contract is directly proportional to the quality of the deployed code. It involves extensive review and analysis of smart contract code. To do this, smart contract auditors check for common bugs, known bugs on the main platform, and simulate attacks on the code. Developers (usually external smart contract auditors) can then identify bugs, potential bugs, or security holes in the project’s smart contracts.

This service is crucial in the blockchain industry because deployed contracts cannot be changed or irrevocable. Any flaws are highly likely to cause the contract to be dysfunctional or prone to security breaches, resulting in irreparable damage. Today, getting audit verification is a contributing factor to earning user trust.

Steps of smart contract audit:

1. Check consistency between code features and project white papers;

2. Check for standard vulnerabilities;

3. Symbolic analysis;

4. Automated analysis via automated tools (Method 1): Tools like Truffle and Populus are used for automated code testing . This approach takes very little time and has a finer penetrability compared to manual code inspection. But it also has limitations that lead to misidentification and missing bugs;

5. Manual code and code quality review (Method 2): In this case, the code is checked manually by an experienced developer. Although automatic inspection is faster, manual inspection can lead to errors and omissions;

6. Gas usage analysis;

7. Performance optimization;

8. Report preparation.

Smart Contract Audit Firm

1. CertiK: Founded in 2018, CertiK is one of the top choices in the blockchain market because of its transparency and verification engine verification tools that ensure scalability and excellent security. That said, their approach is primarily mathematical. The company claims that they detected more than 31,000 vulnerabilities in smart contract code, audited 1,737 projects, and acquired more than $211 billion worth of digital assets.

2. Hacken: Hacken is another company that provides auditing services for blockchain platforms such as Ethereum, Tron, EOS , etc. Their services are not limited to blockchain solutions, Hacken also provides security products for IT companies. The Hackennai Security Platform is a solution designed by Hacken to protect end users from security compromises by enabling features such as dark web monitoring alerts.

3. Quantstamp: Quantstamp is a blockchain security company with developers from top IT companies such as Facebook, Google, and Apple. Quantamp has a wide range of blockchain security tools and services, including: Decentralized Security Network for smart contract auditing. According to them, Quantstamp protects over $200 billion in digital assets and they have more than 200 foundations and startups involved in their product.

4. ConsenSys: Founded in 2014, ConsenSys is a strong team of software developers, business experts, lawyers, smart contract security audit and security providers. Its platform is based on the Ethereum ecosystem and aims to provide blockchain solutions such as security and product protection, financial infrastructure, etc. The company has smart contract security analysis products. It provides cryptoeconomic analysis and automated smart contract scanning for the Ethereum blockchain.

5. Chainsecurity: Provides products and services that secure blockchain protocols and smart contracts. Chainsecurity is trusted by over 85 blockchains and has acquired over $17 billion worth of digital assets. They also work with PricewaterhouseCoopers Switzerland to conduct security reviews, create solutions for evaluating smart contracts, and test and run smart contract performance metrics.

6. Runtime Verification: Runtime verification runs security audits on virtual machines using a run-time verification approach that improves standards compliance and provides broader coverage during execution. Runtime products and services include Smart Contract Validation, Protocol Validation, Advisory Services, Firefly, ERC20 Token Validator, and IELE.