What Is A Smart Contract Audit?
Tags: Blockchain Development, Smart Contract Security, Blockchain, Smart Contract Auditing, Smart Contracts

Smart contracts are an excellent invention of the XXI century. However, technical vulnerabilities can expose the entire system to the risk of hacker attacks. Both platform users and a company’s reputation can suffer, so it is important to conduct audits to mitigate project risks. Most of all, smart contract audit services are popular among crypto projects like DeFi exchanges, DeFi lending platforms, and others. In such projects, smart contracts are the main engine of the software, where all the logic of work is laid. In this article, we will tell you what a smart contract audit is and how to conduct it correctly.

Why is smart contract audit important?

Cracking smart contracts is a common phenomenon in the crypto world. Causes of the crash are divided into two types: technical code vulnerabilities and human error, and if it is difficult enough to exclude the possibility of human error, it is necessary to eliminate technical errors. This is where comprehensive smart contract audit services can help.

Smart contract auditing is a process that scrutinizes a piece of code to identify bugs, vulnerabilities, and risks. It is often conducted before the code is deployed and used on the main network because then it is no longer subject to change.

As practice shows, all blockchain projects need smart contract audit services because the crypto world is characterized by decentralization and openness. Almost all crypto projects are required to publish source code on Github to prove the purity and transparency of their platform, cryptocurrency, token, ICO, etc.

Let’s say a quality blockchain project goes for an ICO but does not provide the results of smart contract testing and an external audit of the ICO. Trust in such ICO will be minimal, as investors have no guarantees of preserving their deposits. As a result, the blockchain project will not get into the top ICO projects and will receive poor recommendations from experts, despite the innovativeness of the idea. No guarantees — no investment.

The crucial point is that smart contracts should be audited externally. This is because the programmer, who wrote a smart contract, can find flaws in the code, but it is quite difficult for him or her to consider different variants of the logic of his or her smart contract functioning.

Smart contract audit services

Typically, smart contracts are audited using two approaches: manual and automated.

Manual auditing involves a team of experts/auditors examining each line of code to analyze it for compilation and re-entry errors. This can further help identify other underestimated security issues.

Manual code analysis can be performed using two approaches — checking a standard list of vulnerabilities or performing a free exploratory check based on the developer’s own experience. This approach is considered the most accurate and comprehensive, as it detects hidden issues such as problems in the contract logic or architecture, not just bugs in the code.

Automated security analysis follows a sophisticated approach to penetration testing and helps find vulnerabilities much faster. This approach is suitable for projects that require faster time-to-market. As part of automated smart contract audits, auditors use a variety of bug detection software. This software helps find the exact location responsible for executing each input and also indicates where a possible error might occur.