Smart contracts are increasingly important in our world, as blockchain technology impacts many industries. To the uninitiated, smart contracts are automated, self-executing programs that run on a blockchain.
Smart contracts must be audited to identify and fix security vulnerabilities. Otherwise, any little flaw can be exploited to cause severe damage. This article will tell you what you need to know about smart contract audits.
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What is a smart contract audit?
It is a detailed analysis of a contract’s code to detect any security flaws a malicious actor could exploit. It involves examining each line of code to identify simple or complex errors and determine how to resolve them.
Audits are essential before publicly deploying an automated contract. Many contracts that weren’t properly audited have been hacked, and user funds were drained to the tune of millions of dollars.
Why are they important?
The blockchain sector is growing worldwide, and smart contracts are handling increasing transaction volumes. This rapid growth makes smart protocols a prime target of hackers looking to steal funds. Any little vulnerability can be a windfall for malicious actors, meaning blockchain developers must pay extra attention to security.
An audit is a formal process to certify that a blockchain protocol is free from security errors before its public deployment. Users don’t trust blockchain projects that have not been formally audited, meaning you need one to attract a user base.
Smart contract auditing process
A smart contract audit is a comprehensive process with several steps, including:
The first step is for the project owner to gather relevant documentation and present it to the auditor. The documentation includes the contract’s whitepaper, codebase, and other relevant material that helps the auditor understand the project.
At this stage, the protocol owner freezes the codebase to prevent further changes during an audit.
Once the auditor understands the codebase, they deploy automated tools to run security tests against it. These computerized tools help detect routine issues with the codebase. A computerized testing software has a database of known vulnerabilities that it checks the code against and raises an alarm if it detects any.
Some automated testing tools also incorporate artificial intelligence to detect security and architectural flaws in the contract’s code.
Automated testing isn’t enough. Auditors must also conduct a manual code review to identify complex security and architectural vulnerabilities. Bots are good at identifying routine errors, but some complex errors need a human to detect. Bots don’t understand what the blockchain developer wants to achieve with the contract, but a human fully understands and can pinpoint coding mistakes that will hinder the intended goals.
Auditing firms employ blockchain technology and security experts to handle the manual review.
After identifying any issues with the protocol, the auditing team brainstorms on solutions to these issues. They’ll apply their expertise and experience to create working solutions to the identified errors.
This process can take a long time, but it’s critical to the project’s success. It’s better to wait and fix issues than deploy the contract and get hacked shortly after.
The auditing team prepares a formal report detailing any issues they found and the suggested solutions. The project developer studies this report and implements the suggested solutions.
Afterwards, the auditor certifies that the contract is safe and releases a final public attestation. The project owner usually posts the final report on their website to boost user confidence.
How long does a protocol audit take?
The timing depends on several factors, primarily the protocol’s size and complexity. Larger blockchain projects take more time to audit than smaller ones. Audits take anywhere from a few days to several months.