9 programming languages for smart contract development 9 smart contract vulnerabilities and how to mitigate them

How to conduct a smart contract audit and why it's needed

Smart contracts ensure the integrity of transactions, such as those that initiate key services. A smart contract audit is one way to ensure the programs work as designed.

Smart contracts offer many advantages. These self-executing programs, which run on VMs and are stored on a blockchain, automate how agreements are completed after certain conditions are met.

Smart contracts can be used for a variety of purposes, such as orchestrating business processes, transferring assets or initiating services. The process is straightforward: Once all provisions of a particular transaction or request have been satisfied, the contract responds accordingly.

Blockchain's inherent security makes smart contracts difficult to compromise. Instead of being deployed on centralized networks where control resides in a single location, smart contracts are installed on decentralized networks with control and management functions embedded across each node. User files and data hold access and security codes, so regardless of where data might travel, its credentials are available.

This doesn't mean smart contracts are not without issues. If a contract has coding issues or is hacked, for example, it must be replaced by a new contract. It is key, then, to conduct a smart contract audit to ensure any flaws, errors or vulnerabilities are addressed before it goes onto a blockchain and is used.

Graphic listing the top smart contract vulnerabilities

What is a smart contract audit?

Because smart contracts play important roles in executing business logic -- often autonomously -- and contain critical data, their security is paramount. Once a smart contract is on a blockchain, it is accessible by anyone. Any flaws, therefore, are also accessible by anyone.

A smart contract audit is an evaluation of a smart contract's code. Audits, which can be automated or performed manually, should be completed prior to putting a smart contract on a blockchain. Audits examine smart contract code from multiple perspectives to do the following:

  • Pinpoint coding errors, flaws and subpar code.
  • Identify security vulnerabilities.
  • Measure reliability and performance.
  • Prevent security attacks.
  • Identify logic error.
  • Find issues with storage, data, memory, environments, logs and other metrics.

The goal of a smart contract audit is to remediate any issues the audit uncovers. Identifying and remediating flaws in the contract before it is deployed ensure its reliability and safety.

Who performs smart contract audits?

Smart contract auditing requires special expertise that differs from general IT or system and organizational control audits. IT departments and internal audit departments can conduct their own smart contract examinations, but expert coding and logic skills are key prerequisites.

Because many organizations do not have this expertise in-house -- or because they want a third party to do the work -- they can hire firms that specialize in smart contract audits. These companies have the expertise needed and their own automated tools, such as specialized software, to properly analyze a contract's code in detail to identify potential problems.

How to perform a smart contract audit

The exact steps of a smart contract audit will vary from contract to contract. In general, smart contract steps include the following:

  1. Define the audit and get management approval.
  2. Identify the audit team. Assuming employees have the proper coding analytic skills, audit team members can come from internal audit and IT departments. Otherwise an external smart contract auditing firm can be used. Teams can also be composed of both internal and external resources.
  3. Collect evidence. This includes documentation that describes the smart contract, its purpose and activities, how it was designed and developed, how it operates when executing, testing results and other relevant documents. Access to the code is essential.
  4. Freeze code. Once evidence has been collected and access to code is available, a freeze on all code changes must be enacted. This prevents any changes from affecting the integrity and accuracy of the code analysis.
  5. Perform automated code analyses. This step is where the actual field work begins. Launch automated tools to examine code for anomalies and suspicious code that might suggest security vulnerabilities. These tools can examine many different criteria. Results might indicate further analysis is needed. It might also be useful to conduct penetration tests to identify potential security flaws.
  6. Perform manual code analyses. Manually examine lines of code to find issues the tools might have missed. Examiners can refer to smart contract documentation to see if the code as written will execute as it was designed. A manual review, in combination with automated testing, will produce the best results.
  7. Remediate any identified issues. Resolve any issues once the code analysis is complete. This is especially important to ensure the code is correct and secure. Test the remediated code to check it works correctly before it is deployed.
  8. Prepare and deliver a smart contract audit report. Consolidate all the evidence gathered, including the results of code analyses, remediation and testing, and any other activities. If more post-audit work is needed, determine when those activities must be completed and document those decisions.

Smart contract audit tools and audit firms

The following is a list of smart contract audit tools and audit firms.

Smart contract audit tools

  • Manticore
  • Mythril
  • MythX
  • Scribble
  • Securify v2.0
  • Slither
  • SmartCheck

Smart contract audit firms

  • CertiK
  • ConsenSys Diligence
  • Cyfrin
  • Hacken
  • KPMG
  • QuillAudits
  • Solidified
  • Vanta

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