Nowadays, smart contracts have gained popularity and thus become more prone to security vulnerabilities. Unfortunately, it is impossible to exclude bugs totally and forever, so smart contract security audits are regularly required. When investing in the audit process, you invest in secure smart contracts by checking them.
Smart Contracts: Look from Inside
Smart contracts are programs or transaction protocols automatically executed when meeting predetermined conditions. Blockchain technology helps to avoid unnecessary intermediates, reduce fraud losses and provide transparency of operations. Moreover, thanks to the blockchain security feature, it is considered secure and reliable for financial operations.
It is possible to write smart contracts in many programming languages, including Solidity, Rust and Java. The importance is to follow the information identified on the public web to create a secure smart contract. The good idea is to list some best practices to follow when developing smart contracts.
Smart contracts enable complex transactions between anonymous users with no central authority. This party doesn’t need mutual trust but trust in math and science.
Understanding Smart Contracts Audit
Smart contract security inspections are thorough verification that examines a smart contract’s underlying codes. This audit helps identify and correct flaws or vulnerabilities in your code to improve its functionality. Furthermore, smart contract security assessments will be necessary for developers of decentralized application development involving financial assets.
The Smart Contracts Security Audit entails testing multiple potential scenarios and dozens of testing methods with various third parties and identifying bugs. After the test phase is over, an audit team produces a report.
The necessity of Smart Contract Audits
Due to the growth of the DeFi market at an incredibly exponential rate, the best security practices are essential. So, decentralized finance is a financial system based on smart contracts or builds an entire decentralized application, avoiding bank brokers and other intermediaries. In such a case, ensuring a smart contract security audit by constantly monitoring and checking every actual code by the third party guarantees identified vulnerabilities and bugs.
If smart contract audit companies ignore the Defi contracts audits, it may result in fund losses or data leakage. Thus, malicious actions may affect companies’ welfare and reputation, and businesses may be closed. So, regular testing by professionals and reliable auditing firms is necessary.
Preparation for Smart Contract Security Audit
Good preparation for the auditing process is a key to success and desirable results. It is a counterpart of the audit as thorough preparation and clarification of expected results makes developers closer to success. So, how to prepare and what steps to follow before smart contract auditing?
- Documentation. Any testing requires a deep study of project documentation. If you wish to straightforward the audit process, you should deliver good documentation so that the audit team does not waste time understanding the target system. Markers of good documentation describe what you are building and for what reason (try to describe the system as a whole and each contract within a system if it splits into multiple modules with other contracts). Another feature of the documentation is a description of the system’s functionality.
- Clean code. It is easier to read well-formatted code when reviewing the system for bugs. It is crucial to check the smart contract code before auditing. Revising and removing all the errors, codes you do not need, or those commented out is necessary.
- Discuss the outcome. Before starting testing, the development team should discuss with auditors the scope and parameters of auditing and define the desired results. However, both parties should be ready to have a further discussion that may appear in the process.
- Code freeze. Code finalization is required to prevent both parties from making adjustments or undesirable changes to the code during the process. For example, if an owner makes some amendments during an audit, the time is wasted as the changed code can impact other codes.
- Checklist. It is better to stick to a definite checklist compiled before to keep control and get the required outcome. The list provides the necessary steps and ensures auditors have nothing missing.
Smart Contract Audit: How Does It Work?
All smart contracts audit firms should have their ways. Also, a project may vary depending on the service performance and the complexity of the code. Usually, smart contract auditing involves many steps.
All smart contract audits are split into several stages with one or more auditors in charge. Preparation is an initial step in project auditing. It may be treated as the most important part. During the main phase, the audit teams aim to collect maximum client data in the required format for objective assessment.
Not all audits have the same scope. For example, some clients might want to check their entire projects. Some only want one. For security reasons, auditors must prepare verified scopes for each audit to share among all auditing personnel. The audit scope is defined in the audit document in terms.
After thorough preparation, auditors start the phase of analysis and testing to detect smart contract vulnerabilities such as bugs or external contract calls that may lead to risks and errors. Thus, the next phase of auditing comes into action.
It should be mentioned that process of auditing is not just the code formal verification. Besides the test suite that is tailored to every function of the audited project to make sure it may prevent overflow and handle underflow conditions, the auditing company provides detailed reports concerning compiler warnings and other vulnerabilities before malicious actors decide to carry out any attacks.
So, smart contract security auditing implies reviewing every line of code and creating test cases to apply them in all possible penetration scenarios. If the development team supplies unit tests, it will simplify the process and assist in a better understanding of the tested code. Moreover, integration tests can test interactions between contracts or components in a single contract.
In the final stage, the auditing team issues a final report that includes detected bugs, recommendations for fixing, and necessary changes to upgrade security. Moreover, in the audit report, you get comments concerning documentation quality, coding practices, and other suggestions to improve the project.
Another piece of advice to get as many benefits as possible is to start audits 2-3 weeks before the project’s planned launch. In such a case, after receiving a report and fixing all detected bugs, you have time to re-audit and post the contract on bug bounty.
Good preparation for the process is a guarantee of success and quick performance. A qualified and reliable auditing firm will discuss each point in a checklist to clarify the scope, duration, and desirable outcome. In addition, significant dependency on smart contracts makes Defi audits essential for a security guarantee and funds protection.
So, before launching a smart contract, project developers should make the required preparations and provide a thorough checklist if they want to get success and cover the planned scope.
The best solution is to prepare all documentation, including code documentation, and make a checklist of the desirable auditing scope. In such a way, you will be sure that you did not miss anything and that test coverage will be 100%, including all edge cases.
Smart contract verification involves two aspects: security considerations and errorless. It is performed simultaneously on the source code, bytecode level, and even on both.
The Smart Contract Audit process (i.e., initial audit) is ideally 2 to 14 days if the project’s complexity is large or the smart contract size is urgent. However, a large project audit can last up to a week.
Depending on the complexity, companies providing smart contract auditing services usually charge between 500 and 12,500 USD.