Smart Contract Audit is a comprehensive and systematic examination and analysis of the code used by a smart contract to interact with a Cryptocurrency or Blockchain. Finding bugs, technical problems, and security flaws in the code is done using this approach. With it, smart contract security audit experts can recommend solutions and make changes. Smart contract audits are usually required because most contracts deal with valuable items and financial assets.
Smart contract auditing does not provide a complete guarantee that the contract will be free of errors or vulnerabilities. However, it does ensure that the smart contract is secure, after being evaluated by a technical expert.
Cyber-attacks on Blockchain Networks and Smart Contracts
The onus is on Blockchain developers to find and fix vulnerabilities before the vulnerabilities are used for real-world attacks.
Malicious entities use two main methods to carry out a successful attack: bait and response attack. The first relies on social engineering tricks, such as persuading the victim to send crypto to the attacker's wallet; The second and more complex strategy requires a deep understanding of Blockchain network smart contracts and related elements, such as cross-chain and side-chain wallets, as well as knowledge of various protocols.
With large amounts of value traded or held in smart contracts, they become attractive targets for malicious attacks by hackers. Simple programming errors can lead to the theft of large amounts of money.
Here are three notable Blockchain attacks.
Wormhole Bridge
The Wormhole Bridge hack is the second largest attack in the crypto world to date. The breach cost Wormhole, a well-known bridge between the Ethereum and Solana chains, roughly $320 million. The attacker took advantage of a loophole in the bridge to steal 120,323 Ether, or XNUMX million dollars.
The attacker was able to mint around 20,000 hours’ worth of Ethereum on the Solana Blockchain worth $325 million at the time of the incident. He did it by forging a valid signature for a transaction without giving any guarantee. Check What is the Cryptocurrency bridge? And why is it important?
Finance CREAM
The hacker acquired Ethereum tokens worth approximately $130 million by exploiting a bug in Cream Finance's flash loan contract. There are significant limitations in Oracle Cream's technology and method of calculating asset prices.
The attacker took advantage of the restrictions on price calculations performed by the smart contracts used by the CREAM Finance platform and changed the price of the yUSD pool used as collateral, causing the 1 yUSD bet to become $2.
As a result, the attacker's original $1.5 million yUSD deposit has doubled, according to Cream Finance. The hacker then turned his yUSD deposit at Cream Finance into $3 billion and leveraged a $XNUMX billion profit to drain the project's overall liquidity.
Reverse Finance
First, the attacker withdrew 901 ETH from Tornado Cash, the Ether Mixer. The attacker then used SushiSwap's INV/WETH and INV/DOLA liquidity pools to exchange them for INV. They then inflated the price of INV using both groups informed by the price of Oracal Keep3r, which monitored the price of INV. This allowed the attacker to inflate the INV price on Inverse Finance and withdraw a $15.6 million INV-backed loan in ETH, WBTC, YFI, and DOLA.
Importance of Smart Contract Security Audit
A weak smart contract reflects more than a flawed programming attempt. It may damage the developer's reputation and damage projects that took months or years to create. As a result, smart contract auditing is now one of the development steps that programmers take for every new project.
The smart contract code for a project is examined and commented upon in a smart contract security audit. These contracts are typically written in the Solidity programming language and served through GitHub. Security audits are especially valuable for decentralized finance projects that expect to process millions of dollars’ worth of Blockchain transactions or a large number of investors.
The process offers the following amazing benefits:
1. Improved protection against hackers.
2. Prevents costly smart contract mistakes.
3. Safer decentralized financial products.
4. Increase confidence in the project and throughout the industry.
5. Increased credibility in an increasingly competitive industry.
The ability for developers to do better and more sustainable work is possible, leading to more secure products and applications, through smart contract audits. In addition, the audit report serves as a stamp of approval from an external expert for a new project, which investors and users can count on.
Security audits of smart contracts are essential for DeFi and NFT.
In conclusion, several notable projects that lost money served as examples and made everyone aware of the urgent need for a good audit of smart contracts. However, even if you do a smart contract audit, there is no guarantee that the smart contract will always be immune from attack. Now you can see the most effective way to prevent the theft of your artwork with NFT tokens.
