Smart contracts are complex programs, and as a result, it is hard to get security right. This can be a problem when huge amounts of assets are attached to them on blockchains. In addition to financial loss, security flaws can erode the reputation of the affected platforms and vendors.

Experienced experts can offer additional assistance with smart contract audits. They can identify problems in the code and help fix them before they get exploited by attackers. How does this process work?

Read on to learn more about smart contract audits and how security teams conduct them.

What Is A Smart Contract Audit?

Smart contracts are stored and executed on blockchains. When certain conditions are met, the agreement is triggered automatically. With this method, parties to an agreement don’t have to wait for any intermediary to execute it.

A smart contract audit is an examination performed by cybersecurity experts with expertise in blockchain technologies. Their job is to make sure the contract’s underlying on-chain code doesn’t contain any security vulnerabilities or other bugs.

Smart contracts may involve valuable assets and investments, making them a common target for malicious actors. Those security assessments are vital to the reliability and security of blockchain applications. They help secure digital contracts on blockchains and prevent attackers from exploiting their flaws.

How To Perform A Security Audit

Prepare

The first step is to give the audit team the specifications and scope of the audit process. This means the team should have access to the smart contract’s architecture, purpose, and other related information.

The audit team should have clear answers to these questions:

  • What does the client need to audit?
  • What is the goal of the audit?
  • Which components are the most critical to the client’s system?
  • Does the client have any concerns, such as a particular attack vector, they need to address?

The detailed assessment process will be built on top of the responses to those questions. The audit team then develops a testing strategy plan that focuses on the required areas it has discussed with the client. The goal is to satisfy their requirements with efficient use of the team’s resources.

It is important to understand the client’s requirements.

Read more: The Complete Smart Contract Audit Checklist.

Test And Assess

The next phase is vulnerability inspection, when the security experts test each individual function (unit tests) and later the bigger components (integration tests). Two indispensable parts of the process are automated scanning and manual review.

Automated Scanning

The audit team can benefit greatly from automatic code analysis since it reduces the amount of time spent testing smart contracts. Multiple tools can be used in conjunction to ensure the process can discover as many programming flaws as possible.

For instance, formal verification is a specialized process used to ensure the correctness of a smart contract. It uses formal methods to flag potential threats to the contract’s logical integrity.

This automated analysis simulates potential values the smart contract may have, checking whether the code does what is supposed to do in those situations. It should execute the contract as intended under normal conditions and handle errors gracefully when they occur.

Most of the time, the audit team also performs a comprehensive vulnerability scan to quickly discover security flaws.

There are plenty of scanners that are useful for finding security flaws in programs and blocking a wide range of potential attacks. Supported by the Ethereum Foundation, Securify is a prime example. This free and open-source tool can carry out static analysis and look for common vulnerabilities in Ethereum smart contracts.

Read more: When to do a pen test?

Manual Review

Manual review is exactly what it sounds like: team members carefully examine each line of code for code errors and vulnerabilities.

This is a labor-intensive process, but it can make up for the drawbacks of automated tools. Human security experts offer more flexibility. They can catch clever attacks and hidden flaws that automated scanning may miss.

The process goes through many steps to make sure there is no vulnerability left.

Report

The audit team prepares and returns a summary of the vulnerabilities they have uncovered. This report typically also includes suggestions for fixing the problems in the smart contract that the audit process has identified.

What to Look For When Conducting A Smart Contract Audit

Security Vulnerabilities

All software categories suffer from security flaws in their code, and smart contracts are no exception. During an audit, the auditors spend most of the time examining contracts for potential security vulnerabilities. While some problems may be obvious, many exploits make use of more sophisticated methods.

Inefficient Code

Performance is another aspect of smart contracts that clients may need assistance from audit teams.

To achieve their intended function, these blockchain-based contracts may include a huge number of transactions. Blockchains like Ethereum charge a gas fee for each transaction for the use of their resources.

This cost for inefficient smart contracts can go up quickly. Audit teams can look at the design and implementation of the contract to find out ways to optimize them and bring down the associated transaction fees.

Wrapping Up

Security is critical in blockchain applications. There is no guarantee of vulnerability-free smart contracts unless you hire top professionals to perform thorough audits on them. These analyses are a proactive approach to protect your assets and platforms from malicious exploitations.

With extensive blockchain security expertise, CyStack’s audit specialist can help you with this. We are committed to working closely with our clients to secure smart contracts and other blockchain-based applications.

Learn more about our services and get a free quote here.