Smart Contract Auditing: What You Need to Know

Blockchain Smart contracts work automatically without lawyers or middlemen. They are used for various transactions such as buying and selling digital art and managing loans. However, any mistakes or weaknesses in these automated contracts can lead to serious consequences like it will cost. Therefore, smart contract audits are important to prevent major issues such as security holes, bugs, and performance issues. A smart contract auditor performs or conducts this audit and is a code detective. He carefully examines the code to identify potential problems and identify ways to make it run smoother. This blog will teach you the ABCs of smart contract audits, the benefits of your DeFi project, and how to do smart contract auditing.

What is a Smart Contracts Audit?

Audits give you peace of mind by building trust. A clean smart contract audit report shows others that your smart contract is reliable and saves time and money. For financial transactions or sensitive data, it works as a smart investment that resembles buying insurance for your digital agreement. A smart contract audit entails a thorough examination of the code and underlying logic of the blockchain smart contract to identify potential security risks, bugs, or performance issues. The goal of a smart contract audit is to ensure that the contract works as intended, with no hidden vulnerabilities or security risks. A successful smart contract auditing process can help avoid unexpected behavior, minimize the risk of financial loss, and increase confidence in the integrity of the smart contract. 

Why Are Smart Contract Audits Needed?

Smart contracts are autonomous, secure, and consistent. Therefore, understanding the likelihood and the nature of contract flaws and discovered errors is essential for smart contract security. Smart contracts work like auditing tools for tracking physical goods, managing intellectual property, and handling financial transactions automatically. However, they also raise security concerns due to their high stakes and potential for financial losses or stolen data. A smart contract audit is a security check-up, examining the code to identify potential vulnerabilities, errors, and inefficiencies. A contract audit for security examination includes;

• In-depth examination of smart contracts to protect invested funds.
• Importance of smart contract audits in identifying vulnerabilities and flaws.
• Analysis of code underpinning smart contracts’ terms and conditions.
• Understanding of key vulnerabilities in smart contracts.
• Importance of smart contract audits and becoming a smart contract auditor.

Benefits of Smart Contract Auditing

Smart contract auditing continues to grow, and so do the benefits, below are some of them listed:

• Security: The primary advantage of smart contract auditing is that it provides improved safety and reliability it offers. By having your smart contracts audited by a professional company, you can be sure that any potential security vulnerabilities will be uncovered and fixed.
• Compliance: Another benefit of smart contract auditing is compliance. If you are working on a project that is subject to regulatory scrutiny, then it is important to make sure that your smart contracts are compliant. Smart contract auditing can help ensure compliance with industry standards and regulations.
• Increased Efficiency: Smart contract auditing can also help increase the efficiency of your smart contracts. By uncovering any potential issues or errors, you can avoid any costly delays or disruptions in your project.
• Peace of Mind: Finally, smart contract auditing can provide you with peace of mind. Knowing that your smart contracts have been thoroughly reviewed and vetted by a professional company can give you the confidence to move forward with your project.

Preparation for a smart contract security audit

Are You Investing in DeFi? Smart Contract Audits can keep you safe from hacks and you can sleep well at night. Let’s see how to prepare before getting a smart contract audit; A smart contract audit service checks for vulnerabilities in each smart contract’s business logic, ensuring compliance with the Solidity Programming Code Style Guide and logical and access control concerns. Security audit standards vary between projects and can be conducted manually or automated. Manual auditing involves experts reviewing each line of code for compilation and re-entry issues, detecting potential security vulnerabilities like poor encryption practices.  The most accurate and complete method for detecting hidden defects in code is through manual auditing.

Manual Auditing

Even though smart contracts are blockchain-based self-executing agreements but still contain vulnerabilities. Manual auditing can prevent these vulnerabilities by identifying weaknesses, bugs, and performance issues. This involves a thorough review of documentation, code, and external factors.

Automated Auditing

Automated auditing uses bug detection software to locate the exact location of errors, often preferred for faster time-to-market projects. However, automated software may not always understand the context and may miss vulnerabilities. Automated testing tools can be valuable, but they cannot replicate the critical thinking and problem-solving skills of a human auditor. An experienced auditor can understand the nuances of code and identify potential issues that automated tests might miss. A clean audit provides peace of mind, ensuring developers’ creation is functioning as intended. Combining manual auditing with automated testing tools can provide a robust defense against potential vulnerabilities in smart contracts.

How to Conduct a Smart Contract Security Audit?

Organizations hire smart contract audit experts to get proper security audits. Auditors use their automated tools, such as specialized software, and thoroughly analyze a contract’s code and identify potential issues with underlying logic. Here’s a breakdown of the process:  

1. Pre-Audit – Setting the Stage: Auditors evaluate development environments, code repositories, test coverage, contract elements, and compilation issues, and execute tests to verify functional and non-functional requirements. Auditors use tools such as Slither for conducting security audits.
2. Line-by-Line Review: This in-depth review involves identifying potential vulnerabilities like Integer overflows/underflows. Errors in mathematical operations can lead to unexpected results.
3. Vulnerability Detection: An attacker can call the contract multiple times within a single transaction. The auditor makes a documentation of all potential vulnerabilities within the code. Checking for default visibility, integer operations, compiler version, access control & authorization, asset integrity, data consistency, language-specific parameters, test coverage assessment, misconfiguration testing, and issue classification.
4. Analysis & Verification – Combining Expertise: Auditors discuss their independent findings. Make an Internal Document & Advisory Report to identify the severity of vulnerabilities, and suggest mitigation strategies. Lastly, Lead Smart Contract Auditor Review all materials to ensure accuracy and completeness.
5. Report – Transparency and Trust: A final report details the audit process, discovered vulnerabilities, and recommendations for improvement.

Smart Contract Auditing Services

Smart Contract Audit Services can ensure the security of smart contracts, which are essential for protecting the money invested in them. These contracts are regularly reviewed, developed, and submitted to the project for a final report, detailing any outstanding mistakes and the efforts made to address performance or security concerns. Our suite of smart contract development services includes auditing services for defi projects and other blockchain applications. You can consider a company by checking factors such as the company’s size, experience, reputation, price, turnaround time, depth of audit, report format, communication style, and flexibility. BloxBytes has extensive experience in security audits, preferably in smart contract audits, which is essential for proper auditing. We offer competitive prices without sacrificing quality. The depth of the audit we offer is comprehensive, and the report format is straightforward and responsive. Our flexibility of the service allows us to work with the client to tailor the audit to their specific needs.

Parting Thoughts

If you have a DeFi project, smart contract auditing is an essential part of it for you. However, it is important for every blockchain project. Smart contract consulting services can help you ensure the security, compliance, and efficiency of your smart contracts. With a professional team handling your smart contracts, you can relax and enjoy the peace of mind that comes with knowing they are in good hands.