What Is a Smart Contract Audit?
A smart contract audit is a line-by-line inspection of a contract’s source code. At Dxentral, our team of experienced solidity auditors manually review smart contracts, identifying vulnerabilities, code errors, and potential risks to a project, as well as use the best-in-class AI to analyze and verify the soundness and security of a contracts code.
A smart contract audit is an extensive methodical examination and analysis of a smart contract’s(or multiple smart contacts) code that is used to interact with a cryptocurrency or blockchain. This process is conducted to discover errors, issues and security vulnerabilities in the code in order to suggest improvements and ways to fix them. Generally, smart contract audits are necessary, because most of the contracts deal with financial assets and/or valuable items.
Such checks are complex, as smart contracts often interact with each other and any integrations with third-party systems can also result in making the system vulnerable. Because of this, the checks are often expanded to other smart contracts involved in any interactions, and even those that the ones it interacts with are interacting with. Such checks usually include both running tests and manual code analysis.
Smart Contracts Secure Billions of Dollars in Blockchain Ecosystems
Currently, Smart contracts secure hundreds of billions of dollars of value, but they’re mostly unintelligible to anyone who hasn’t learned one of the programming languages they’re written in. And these languages are brand new: Solidity – the first fully-featured smart contract programming language – is less than a decade old
Since Smart contracts often manage huge quantities of funds, a single bug or vulnerability can result in great, or even complete loss of funds. More precisely, the users and stakeholders of applications utilizing such contracts could lose all the assets that are part of that smart contract ecosystem.
Projects that scam, or abandon, their investors’ funds in what have been dubbed “Rug Pulls” often take advantage of centralized privileges, such as a sole person being able to change functions of the contract after deployment; an example like: Changing “taxs” to 100%. Avoiding unnecessary centralization is one way that newly-launched projects can begin building trust with their community.
Security, Authenticity, & Integrity
The recommendations made by the auditors are conveyed in advance to the project team and their actions in response are noted in the final report. It is considered a mark of authenticity and integrity for the project. For that reason, teams are keen on getting an audit to win user confidence and raise the project’s credibility. These audits are typically carried out in several steps.
The initial step is the team and the auditing group agreeing on the scope and specifications of the audit. It means that the design, purpose, architecture and other details of the smart contract are given to the auditors. Next is the testing phase, where the auditors test the individual functions (unit tests) and then larger parts (integration tests).
Dxentral Smart Contract Audits
Dxentral Security Solutions uses a methodology of smart contract testing that is one part manual analysis by our experienced blockchain experts and a second part automated analysis by AI. The best-in-class AI are used by Dxentral to find certain code mistakes and malicious functions. Dxentrals’ team of highly trained Auditors — which are all Blockchain, Data, & Cybersecurity specialists — manually inspect the code to understand the developer’s intentions and interpret the findings in that context. Then Finally, the report is issued with the findings and the project is recommended the most secure course of action to remediate any vulnerabilities, as well as any other recommendations tailored for the client.
The rising importance of smart contract code audits can be gauged by the fact that the Ethereum chain split in 2016 was because of a code vulnerability exploited by an attacker, putting millions of dollars of funds at risk. A “recursive call bug” allowed the attacker to drain the "DAO" democratized hedge fund millions of dollars worth of ETH. The subsequent actions by the community over whether to forcibly return the funds caused disagreements and a hard fork.
Smart contract audits are increasingly important in the blooming DeFi industry, where bug-filled smart contracts are often rushed out to meet investor demand. This has led to a number of costly hacks; in 2021 alone, over 15 billion dollars in cryptocurrencies were stolen in scams and hacks, another record breaking year for crypto-based cybercrimes.
It is important in the blockchain space as a whole for projects to utilize Blockchain-based cybersecurity teams like Dxentral that provide extensive security audits. Continuous smart contract audits for developing projects are very important in order for organizations to mitigate risks to their users and holders, and keep up to date audit reports available for the public to ensure community trust, and more importantly, Security.
