Smart contract security auditing is the process of evaluating the security and reliability of smart contracts, including a detailed analysis of the smart contract code of a protocol to identify security vulnerabilities, poor coding practices, and inefficient code, and then propose solutions to address these issues. Auditing helps ensure the security, reliability, and performance of decentralized applications across Web3.
Why do we need smart contract auditing#
A large amount of value is transacted or locked in smart contracts, making them prime targets for hacker attacks. Even small coding errors can result in significant funds being stolen. For example, on June 18, 2016, an attack on the DAO contract resulted in a loss of over 3,600,000 Ether and even led to a hard fork of the Ethereum network.
Due to the irreversible nature of blockchain transactions, ensuring the security of project code is crucial. The high security of blockchain technology makes it difficult to recover funds and resolve issues after the fact, so it is best to prevent potential vulnerabilities at all costs.
Here are some common smart contract security vulnerabilities: reentrancy attacks, oracle manipulation, integer underflow and overflow, etc., all of which can provide opportunities for hackers.
"When designing and developing smart contracts, security must be a top priority. Minimizing security risks and conducting actionable audits are essential."
How to audit a smart contract#
1. Gather documentation
The project to be audited must freeze the code and provide technical documentation to the auditor, including code repositories, whitepapers, architecture, and any other relevant materials. This documentation should provide the auditor with a detailed guide on the goals, scope, and specific implementation of the code.
2. Automated testing
Also known as formal verification engines, automated testing checks every possible state of the smart contract and alerts to potential issues that could compromise the functionality or security of the contract. Auditors can also perform integration testing, unit testing, and penetration testing to detect security vulnerabilities.
3. Manual review
A team of security experts carefully examines every line of code to identify errors and vulnerabilities. While automated testing can effectively identify errors in the code, human engineers are better equipped to detect issues with contract logic or architecture, technically correct but poorly implemented code, gas optimization, and common attack vectors (such as front-running).
4. Categorize contract errors
Each error is categorized based on the severity of the vulnerability it could be exploited:
• Critical - affects the secure operation of the protocol.
• Major - centralized and logical errors that could result in user funds or protocol control loss.
• Moderate - impacts the performance or reliability of the platform.
• Minor - inefficient code that does not threaten the security of the application.
• Informational - errors related to code style or industry best practices.
5. Initial report
The auditor drafts an initial report summarizing code defects and other issues, as well as feedback on how the project team plans to address these issues. Some smart contract service providers have an expert team that can help fix each identified error. By addressing all issues, the project can ensure the security of its smart contracts and be ready for deployment.
6. Release the final audit report
The auditor details all the discovered issues in a final report, marking each issue as resolved or unresolved. This report is provided to the project team and also made public for complete transparency to the users of the protocol and other stakeholders.
Conclusion
Due to the importance of contract auditing, many smart contract auditing service organizations have emerged, such as CertiK, ConsenSys Diligence, etc. Although the cost may be relatively high, these processes are necessary for the normal launch of smart contracts and must not be overlooked.