4 Steps to Conduct a Smart Contract Security Audit

Today, no one requires an introduction to blockchain technology and the benefits reaped from it throughout various industries. However, as the uses of the technology move quickly, the security aspect may have been left aside. This is also due to the common misconception that anything based on blockchain technology is inherently safe. While the blockchain technology powering fields like cryptocurrencies (Bitcoin, Ethereum, or Litecoin) has immense security, applications that interact with or run on the blockchain are not guaranteed safety.

Here, applications that use blockchain technology do so through smart contracts, which are programs stored on the blockchain and run only under predetermined conditions. Their specialty is the automation of commands that execute with no time loss or the need for intermediaries, adhering to the main principles of blockchain technology itself. The vulnerability of smart contracts, therefore, lies in their coding – bugs, misconfigurations, or other flaws. This is where smart contract security audits step in.

How do Smart Contract Security Audits work?

A typical smart contract security audit focuses on the code that powers various blockchain-related applications for coding errors, design issues, or other security risks. There are a number of steps that make up an ideal smart contract security audit.

1. Specification

The project’s architecture, its design implementation, and certain build processes help us in identifying the right specification, all of which are included in its README file. Some projects involve whitepapers and docstrings which describe some portions of the code and its purpose, but this doesn’t make up for the complete information provided by a specification. Teams in charge of the auditing process require a well-written specification to know about the code’s purpose to judge if it produces the right output when executed.

Auditors mostly ask when the ‘code freeze’ is scheduled to happen, meaning they need to know if the code is finalized or if any changes are expected. At this point, the code should be in its final preparation stage, looked over completely by the developers, and all fixes are identified and applied. The final commit hash is required for both the audit and the project team to agree on the final code, and any changes, if made, will not be included in the auditing process.

2. Testing

There are different types of tests to detect the issues within smart contracts. The unit test identifies issues in aspects of individual functions while integration tests focus on bigger portions of code. The number of tests done and the coverage achieved is crucial to the test’s success as it resolves all the easily identifiable bugs. Moreover, a test run also defines the purpose of the code and the auditors now have a better understanding of the intended purposes and the optimality of the code’s performance. Consequently, these details go into informal documentation, forming a bigger picture of the code and its expected functions.

A successful run of the tests ensures that no obvious issues will pop out later. If any fail, developers can be asked their opinion and the occurrence of these failures prior to the auditing process can be recorded. If all of them or a significant number fail, the auditing process may need to be paused and the code base reviewed by the developers for a major overhaul.

As we’ve specified, the greater the test coverage, the smoother and more efficient the auditing process. Therefore, verify the test line coverage and evaluate the portion of the code covered under the testing procedure. While 100% is the most desirable option, around 85-90% also works out great. Anything below 70% should be evaluated and more tests need to be included in the arsenal before moving forward.

3. Automated and Manual Testing Processes

Automated bug detection is the simplest way to ensure the resolution of the most obvious vulnerabilities. Automated analysis software can be designed to understand what kind of inputs allows the code to execute, simplifying the entire process by making it easier to recognized vulnerabilities. The auditing time is thus reduced and the team can focus on the more complex security risks.

An issue that pops up with automated testing is the occurrence of false positives. These testing tools cannot be programmed to understand the purpose and context of the code. Therefore, manual testing is required to analyze each false positive and test the authenticity of the claim.

Manual pentesting covers all of the complexities of the code and understands it in the intended direction of the developer. This is where specification plays its importance so that the auditing team understands the original purpose and then checks for the expected output.

4. Auditing report

Finally, the smart contract security audit ends with an auditing report that collects all the findings and provides recommendations. It’s essential that the project team understands the vulnerabilities discovered along with its recommendations so that these can be suitably implemented.

However defined the steps are, there are certain situations where one is required to innovate according to the situation and not follow the rulebook. An ideal smart contract security audit is dependent on its coverage and the effectiveness of identifying issues with constant monitoring to detect future troubles.

I hope this tutorial helped you to know about the 4 Steps To Conduct a Smart Contract Security audit. If you want to say anything, let us know through the comment sections. If you like this article, please share it and follow WhatVwant on Facebook, Twitter, and YouTube for more Technical tips.

4 Steps To Conduct a Smart Contract Security Audit – FAQs

What is a Smart contract Security Audit?

A smart contract security audit is an accurate and thorough analysis of application smart contract sets.

How are smart contracts audited?

A smart contract audit will seek to test and challenge the code of the contract in a variety of ways.

Are smart contracts safe?

Smart contracts are most secure if the programmer is knowledgeable in this field.

What does it mean for a coin to be audited?

A smart contract audit is an extensive methodical examination and analysis of a smart contract’s code that is used to interact with a cryptocurrency or blockchain.

Comments Rating 0 (0 reviews)

Leave a Reply