Whether it is the financial revolution, tokenization of assets or the implementation of any use case on top of a Blockchain platform, smart contracts are imperative. In essence, smart contracts are just a few lines of code that are used to execute a condition. For example, all the terms are specified by a series of smart contracts if you are obtaining a loan from a DeFi app like Aave and Compound by supplying some collateral and paying fixed interest on the loan.
A digital ecosystem of financial transactions is being created in this scenario by a number of smart contracts. The thing to note here is that these multiple smart contracts are interdependent. A small mistake in any line of code of any smart contract can lead to drastic results.
It's a general misconception that an audit of a smart contract takes an excessively long period. This is a generalized view, while in reality, the time required for a smart contract audit depends on the complexity of the use case and various other factors. The lack of knowledge about the audit time is one of the main reasons why many smart contracts remain unaudited.
How long does smart contract auditing take?
Mentioned below are some possibilities in terms of time that a smart contract audit may take:
1. The most common factor to consider for an audit is the size of the project. The complexity of the project is also important, but the size of the project becomes the main characteristic to define the time an audit will take.
In general, a simple smart contract like a token contract for ERC20 tokens can take a couple of days, which means that the audit time for such contracts can take between 24 and 48 hours. This again is based on how complicated the project is. In the event that an ERC20 is used within a Dapp, the audit can take almost a full month.
The token sale contract is an another type of contract. These can be defined as advanced ERC20 contracts with defined tokenonomy and advanced features. Functionalities such as betting and trading can also be part of such contracts. A full audit of such contracts can take one to two weeks compared to a couple of days for a basic ERC20 contract.
2. As mentioned above, the time for audits also depends on the complexity of the project. For example, if you are building a decentralized exchange or decentralized money market like Aave, the audit requires an expert auditor and an extensive schedule to ensure there are no backdoors. In such a case, even oracles need to be audited along with automated market makers and other parts of the ecosystem.
In some cases, the reliance of a protocol or smart contracts on external factors exposes it to huge vulnerabilities that can lead to unimaginable losses.
Therefore, this type of application requires an audit that takes up to 1 month.
Other projects that fall into this category are loans, borrowings, insurtech and derivatives, among others.
3. The types of audits also play an important role in defining the time required. If your smart contract has been coded to the best development guidelines and you are sure of its integrity, a mid-term audit should be your choice.
In an intermediate audit, an expert is assigned to a project to review the structure and analyze possible vulnerabilities. A mid-term audit helps ensure that the project is moving in the right direction and that a potential vulnerability that could change the entire application structure at a later stage is identified as early as possible. This audit typically takes one day to complete.
A full security audit is then performed. While an intermediate audit can be performed while the smart contract is being developed, a full security audit comes into play after the application has been completed. This is generally the last step required before the application can be deployed to the main network. If an application is deployed without a full security audit, there is a high probability of core network bugs and vulnerabilities. The time for a full security audit depends on the complexity of the project, as explained in point 1.
The process of completing a smart contract audit can be manual or automated. Automated auditing involves testing the smart contract code against various predefined testing functions and tools. This gives the smart contract's general vulnerability evaluation. However, this type of audit does not cover in-depth analysis of code and other vulnerabilities such as backdoors. To do this, a manual audit must be performed. In manual audits, a team of experts defines some custom test cases and inspects various aspects of the code.
Automatic auditing can take up to a day for erc20/bep20 contracts, while manual audits usually take 3-5 days for erc20/bep20 contracts, while for complex protocols the audit time depends on the code. To get a personalized check on how long the audit will take for your protocol and what type of audit is best, contact the experts at QuillAudits for a free consultation.
Looking at the time required for different types of smart contracts and DeFi applications, many people go to market with their innovative products without getting audited. The main reason behind this is the enthusiasm or FOMO of someone else presenting a similar project on the market. Another reason may be additional costs that a person might not want to bear.
However, the importance of getting a smart contract audit cannot be stressed enough. Just a little extra time and money spent auditing smart contracts can save millions for users.
To provide a better perspective on the need for a smart contract audit, below are the top DeFi hacks that occurred due to a simple mistake of not getting an audit.
Best DeFi Tricks
The DAO Hack
DAO is a decentralized autonomous organization that is becoming the new standard to define the governance model of any application. In essence, the DAO makes decisions for the application through smart contracts. Smart contracts are therefore essential in such a scenario.
In one such case where the DAO was responsible for democratizing the Ethereum process funding process, a hacker exploited the reserve function vulnerability in the smart contract. Using a reentry attack, he stole 3.6 million from the protocol.
Parity Attack
In order to authenticate the transfer of Ethers, Parity developed the idea of multiple signatures. He accommodated this process through a series of smart contracts that required more than one digital signature to authenticate the transfer of Ether.
Because it was not audited properly, a hacker was able to exploit the smart contract's reserve and delegate call feature and steal up to $30 million worth of Ethers.
Conclusion
The aforementioned tricks are just the tip of the iceberg. The DeFi ecosystem has experienced a great deal of hacking. These hacks are expanding tremendously along with DeFi. One of the main reasons behind this increase is unaudited smart contracts or poorly audited smart contracts.
Having your smart contract audited does not guarantee its security, but what matters is that it is audited by an experienced and industry-recognized team like Quillaudits.
Even if it takes some time and money, having your smart contracts audited by an experienced team can help you build a sustainable project and reach the zenith of your success.
