The DeFi world is steadily replacing traditional financial transactions as the de facto norm. Decentralized finance has several advantages over the conventional financial system, which gives us the assurance to predict that it will take over as the dominant form of finance. We will be discussing smart contracts on the blockchain in this exclusive post on the need for a smart contract audit.
At its core, DeFi is a financial system governed not by a third party but by a few lines of code. These lines of code define the rules and regulations necessary to enforce the terms and conditions of a financial service. What we refer to as a smart contract is these lines of code.
Therefore, it goes without saying that smart contracts are an integral part of the DeFi world. This leads to the deduction that DeFi relies heavily on smart contracts. If the smart contract doesn't work, DeFi won't work either. When we say that a smart contract is not working, what we mean is that due to some vulnerability, bugs or poorly written code, the functionality defined in the smart contract is questionable.
Smart contract audits are necessary to make sure a smart contract is safe and effective.
What is a smart contract audit?
In smart contract audits, auditing companies examine the security of a smart contract and the quality of its code. Through this, the auditing company can identify possible mistakes, errors or vulnerabilities in the contract. This in-depth analysis of smart contacts not only leads to smooth operation and execution, but also protects the application from huge potential losses in terms of finances, assets, or reputation.
Therefore, it is very important to audit smart contracts before implementing them because once the code is written on the blockchain, it cannot be modified. Security breaches can also welcome many other problems, such as the contract may not work the way you want, or more seriously, it may even result in loss of data or money.
One point to consider here is that a smart contract audit not only tests it against possible attacks, but much more than that.
The key areas to consider when conducting smart contract audits are:
A thorough check of code consistency.
Focus on common errors like compilation, re-entry errors, stack issues, variable types, and more.
Focus on host platform specific bugs and security flaws
Efforts to simulate attacks on the contract
The Approach toward Smart Contract Auditing
Generally, smart contract audits are performed using the following two approaches:
Manual auditing involves a team of experts/auditors, who examine each and every line of code in order to analyze it for compilation and re-entry errors which can further help identify the other past security issues for high. This is how the successful and long-term implementation of your smart contracts will be practically possible.
Manual code analysis can be done using two approaches: perform a standard vulnerability list check or perform a free exploratory check based on the developer's own experience.
This approach is considered the most accurate and complex, as it results in the detection of hidden problems; such as problems in the contract logic or architecture, not just bugs in the code.
Automated Security Scanning follows a sophisticated penetration testing approach and helps find vulnerabilities much faster. This approach is suitable for projects that require a faster time to market. Auditors use various error detection software under this approach. These softwares help to find the exact place responsible for each input execution and also indicate where the possible error can occur.
However, these programs have their own drawbacks. The fact that they are extremely fast; they can sometimes miss vulnerabilities or identify any piece of code as a bug when it is not. This can result in many serious concerns, so the manual code analysis or manual audit approach is strongly recommended.
Why do smart contracts on the blockchain need auditing?
The need for a smart contract audit cannot be stressed enough. The incredible traction of the DeFi world has attracted the interest of people with bad intentions. This is why we have seen a ridiculous increase in DeFi attacks in recent months and these attacks are expected to increase in the future as well.
Considering the role that smart contracts play in the DeFi ecosystem, their audit should be of the highest priority.
The main goal of getting smart contract audited is to detect and eliminate smart contract vulnerabilities and also to control the reliability of contract interactions, thus ensuring a seamless DeFi application.
We need smart contract audit
To identify errors before they cause losses.
To improve the performance of smart contracts
For code optimization resulting in lower transaction fee
For contract performance validation
To meet regulatory or compliance requirements
Provide credibility and instill trust among people.
The list is long and it is unquestionable why we need smart contract audits.
Is auditing smart contracts enough?
The question that naturally comes to mind is how can we ensure that the contract or project we are participating in is free of vulnerabilities or is a secure project?
The simple answer is that you can never know.
So far there is no such approach that can concretely say that the project is secure or free from all bugs and vulnerabilities. The closest we can come to gaining such trust is to have a detailed 'audit report'.
Therefore, the task of an audit is to perform a deep analysis of the smart contract using various approaches to verify the formal logic, identify all potential risks or threats or security issues and inform customers about these, along with various other functionalities, critics. The audit also helps to generate an optimized product and further helps to gain the trust of customers, building the trustworthiness of your smart contract.
Today, smart contract auditing has become a vital part of a DeFi project. Isn't your audited smart contract the only question? The main question is, is your smart contract audited with best practices and experience?
