The smart contract audit is a necessary process that helps detect various security vulnerabilities. First of all, the audit has a preventive value for avoiding the occurrence of an emergency. Cybersecurity experts carefully analyze the machine code to identify inconsistencies that hackers can use to break data and steal financial assets.
Currently, there are a large number of smart contract audit services, such as Hacken, OpenZeppelin, Slowmist, and others. However, most use the same methods and tools to identify problems in the blockchain security system.
In the current review, you can learn more about the variety of vulnerabilities and possible threats connected with smart contract technologies. Plus, you can get an insight into the main stages taken by the audit experts on their way to creating the smart contract audit report.
3 Key Smart Contracts Vulnerabilities that a Security Audit can Detect
Below, you can get an insight into the possible vulnerabilities which may be found during a smart contract security audit. Mention that it is not a complete list since the variety and vectors of attacks are changing along with the development of blockchain technologies.
#1 Wrong code realization
It is one of the most frequently encountered smart contract threats due to the fallback option. This threat can occur when there is an error or typo in the signature line, when choosing the wrong interface parameter, and when making an incorrect deposit to another contract. In all of the above situations, the system calls the fallback function.
#2 Reentrancy attack
Another widespread threat that the smart contract auditor firm may face with. According to detailed analysis, such attacks are often related to the Ethereum smart contracts. Due to the specificity of the current crypto network, it may call various functions synchronously. In this case, the calling code must wait for the outer method to finish executing before continuing its process.
As a result, there may be a situation when the called contract can utilize the special conditions of the calling one. The complexity of this threat lies in that it is problematic to figure it out during the development or deployment process.
#3 Wrong calculation of the token amount
This vulnerability is especially typical for smart contracts associated with DeFi, in which finances are denominated in various tokens, the value of ETH, and so on. In this case, the main operation is the transfer of assets from one contract to another, which can create many potential errors.
They are mainly related to incorrect interest, fees, and profits calculation. In addition, you may face the problem of decimal places and violations of the commission calculation algorithm that may cause big problems. Another serious problem of such errors can be the complete blocking of tokens.
In this case, any auditor’s main task is checking the accuracy of mathematical operations. As a rule, none do it manually since it is pretty complex and inefficient. Instead of this, the audit experts use different automatic tools that were described above.
What is Smart Contract Security Audit?
A smart contract audit is a step-by-step testing and analysis of the smart contract code used by the system to interact effectively with a cryptocurrency or blockchain. The primary purpose of this process is to detect errors and conditions that a hacker can use to steal data and assets.
When a company hires a smart contract audit team, they expect to receive a detailed report and practical recommendations for resolving inconsistencies.
How to Conduct a Smart Contract Audit?
Auditing smart contracts involve the following key steps.
- Check the scope of the audit. Any project has general principles and architecture that affect a smart contract’s features. Therefore, the team’s first important step is understanding the project’s ultimate goal. All the necessary technical information can be obtained from the smart contract specification document (usually, this is a README file).
- Unit testing. At this stage of the smart contract auditing process, specialists create working versions of contracts on which they conduct testing without potential risks for clients. At the same time, auditors use special tools within the particular network to understand how testing covers all possible vulnerabilities.
- Manual code analysis. In this stage, an experienced auditing team checks each line to detect code errors. Often, they use manual code review takes much more time compared to the automatic one when they use special auditing tools.
- Automated auditing. As the name suggests, here, experts use special analysis tools to find critical bugs, costly errors, security flaws, and so on. Check out the most widely-used services that cyber security experts utilize: Scribble, MythX, and Slither.
- Initial reporting. Now, the experts send all information they gathered to the report project team.
- Detailed audit report. The final report is a more laconic and precise version with all necessary fixies by the project development team. It consists of the whole data of the smart contract code review: security vulnerabilities, penetration testing results, possible vectors of hacks, info about bug detection, and so on.
The Essense of the Smart Contract
It is a machine code written in a particular programming language. Crypto Smart Contracts are stored in the blockchain system and are executed subject to all pre-determined conditions. Given the specifics of the operation, such agreements are designed to simplify transactions, automate the process and better protect data.
There is no way of making changes after deploying smart contracts, which increases the transparency and credibility of the deal. In addition, you do not need to involve additional legal or financial services to approve the agreement. It significantly speeds up the entire process and saves a lot of money.
It is one of the stages when the smart contract auditing firm creates an example of working crypto contracts and checks them in the blockchain network for possible vulnerabilities and potentially fatal flaws.
It is a part of machine code written in a particular programming language. It simplifies the conducting of deals thanks to the automatic approvement when all critical conditions are met. Another great feature of the smart contract is that it does not require any external organization or institution that should approve the deal.
Among the key vulnerabilities are the following: reentrancy, wrong code realization, incorrectly handled exceptions, wrong calculation of the token amount, etc.