5 major smart contract security challenges
Tags: blockchain, smartcontract, webdev, security
Published: 2022-12-15 08:23:58

Smart contracts are digital contracts that are written in code and stored on a blockchain, and are designed to be self-executing and automatically enforce the terms of an agreement. While [smart contracts offer many benefits](https://metaschool.so/articles/smart-contract-definition/), such as transparency, security, and automation, they also present some major contract security challenges that need to be carefully addressed.

Some of the major security challenges facing smart contracts include 👇🏼

## 1. Code vulnerability

What happens: Smart contracts are written in code and therefore have the same vulnerabilities as any other software code. Bugs in the code can be exploited, allowing attackers to gain control of the smart contract.

It is a major threat to smart contract security because it can lead to the unauthorized execution of malicious code and the exploitation of bugs in the code. Code vulnerability can occur in the form of a variety of security flaws, such as buffer overflows, SQL injection, cross-site scripting, and more.

Such flaws can allow attackers to gain access to the underlying code, enabling them to tamper with the code and steal funds or manipulate the contract for their own benefit. Furthermore, vulnerabilities in the code can also lead to denial of service attacks, allowing attackers to prevent legitimate users from accessing the smart contract.

In addition, and as mentioned before, it could lead to exploitation of smart contract bugs, which can have disastrous consequences. Bugs can allow attackers to manipulate the code and exploit the contract in a variety of ways, such as draining funds, preventing users from withdrawing their funds, or even completely disrupting the contract.

Overall, it’s a major threat and must be addressed in order to ensure the security of the smart contract. Developers must take extra care to ensure that their code is secure and free of vulnerabilities through regular security audits.

## 2. Reentrancy attacks

What happens: Reentrancy attacks allow an attacker to call a contract’s function multiple times before the first call is completed, which can cause unexpected outcomes.

A reentrancy attack is a type of attack that exploits a vulnerability in a smart contract to allow an attacker to repeatedly call a function or method in the smart contract and drain funds from the contract. This type of attack can be particularly devastating since it allows the attacker to withdraw large sums of money from the contract while only spending a small amount of money to perform the attack.

The vulnerability exists when the smart contract allows a function or method to be called multiple times before the state of the contract is updated. This means that the attacker can call the same function multiple times and each time the contract will process the same data and the same set of instructions. The attacker can then use this vulnerability to drain funds from the contract.

Reentrancy attacks are particularly dangerous because they are difficult to detect. An attacker can launch a reentrancy attack without the victim ever knowing that the attack has occurred. This makes it difficult for a victim to take any preventative measures to protect their funds.

In order to protect against reentrancy attacks, developers must take steps to ensure that the functions or methods in the smart contract are not vulnerable to this type of attack. This includes making sure that the state of the contract is updated after each call to the function and that any contract functions that can be called multiple times are protected with proper access controls.

Additionally, developers should use static analysis tools to scan their code for potential vulnerabilities.

## 3. Unchecked Ether sent

What happens: If a contract does not properly check for the amount of Ether being sent, an attacker could send a large amount of Ether to the contract, causing it to become stuck in a loop and preventing further transactions.

Unchecked Ether sent to a smart contract can definitely be a threat to its security. The most common way this happens is when someone sends Ether to a contract without verifying the contract’s code. If the code is not correct, the Ether could be sent to an incorrect address or could be used to exploit the contract and cause a bug.

Also, if a contract is not built securely, it could be vulnerable to attack, such as a reentrancy attack, where someone can repeatedly send Ether to a contract, draining it of all its Ether. This type of attack is especially dangerous if the contract has no limit on the amount of Ether that can be sent, as the attacker can keep sending Ether until the contract is completely drained.

## 4. Denial of Service (DoS)

What happens: An attacker could flood the network with requests, preventing legitimate users from accessing the network or executing transactions.

Denial of Service (DoS) is a type of cyber attack that is designed to disrupt or disable a service or system. It is a serious threat to smart contract security because it can have a major impact on the availability and reliability of the contract.

DoS attacks target the underlying infrastructure of a system, such as the network, server, or storage. By flooding the target system with requests, the attacker can overwhelm it, causing it to become unresponsive or even crash. This can lead to service outages and data loss.

Such an attack also targets smart contracts directly. For example, an attacker can send numerous requests to a smart contract, forcing it to process more transactions than it is capable of handling. This can cause the contract to become overloaded and unresponsive, leading to service disruptions.

They can also be used to exploit vulnerabilities in smart contracts. By sending large amounts of requests to a vulnerable contract, an attacker can force the contract to execute malicious code or cause it to become unresponsive. This can lead to financial losses and data breaches.

Futhermore, DoS attacks can be used to interfere with the consensus mechanism of a blockchain network. By flooding the network with requests, an attacker can prevent the network from reaching consensus, leading to service outages and a loss of trust in the blockchain technology.

In conclusion, DoS attacks are a serious threat to smart contract security. They can have a major impact on the availability and reliability of a contract, as well as its underlying infrastructure. They can also be used to exploit vulnerabilities and interfere with the consensus mechanism of a blockchain network. As such, it is important for organizations to take steps to protect themselves from DoS attacks.

## 5. Data leaks

What happens: If a contract does not properly secure sensitive data, an attacker could access it and use it for fraudulent purposes.

A data leak is a threat to smart contract security because it can lead to the unauthorized disclosure of sensitive information that is stored in the blockchain. This can include information like private keys, passwords, and other sensitive data.

With smart contracts, data is stored in the blockchain, which is immutable and can’t be changed or deleted. This means that once data is leaked, it is difficult to recover and can remain visible to anyone who has access to the blockchain. This can lead to serious security risks, such as the theft of funds or the theft of user identities.

Data leaks can also lead to a loss of trust in the smart contract, as users may not want to use a system that is potentially vulnerable to data leaks. Furthermore, such leaks can lead to financial losses, as the leaked data can be used to manipulate the smart contract and commit fraud. As a result, data leaks can be a serious threat to smart contract security and should be addressed as soon as possible.

These are some major smart contract security challenges that have come up in the past. Blockchains and developers are doing their best to address them, and with that we’ll see smart contracts become lesser vulnerable and exploited.

[This piece was originally published on Metaschool.so.](https://metaschool.so/articles/smart-contract-security-challenges/)