In the Web 3.0 world, users are given absolute ownership over how they manage their data and financial activities.
But how does the blockchain infrastructure, which forms the basis of Web3, support autonomous operation with individual users?
When carefully developed, smart contracts are even more the driving force behind how operations are executed effectively. Simply put, smart contracts are blockchain-based algorithms that execute when certain criterias are met. These smart contracts begin implementing automation into the business process, doing away with the need for human intermediaries.
This helps the blockchain operate smarter and more efficiently at lower costs and faster speeds.
Everything works out for the highest good until a coding flaw gets in the way! All it takes is that unnoticed bug that turns vulnerable to the extent of pulling down the contract and assets linked with it, leading to major losses.
Get on in and traverse the journey of security audits in shielding smart contracts from bug exploits.
The Start
Smart contracts are coded using different programming languages such as Solidity, Vyper, Rust or JavaScript. During the process, safe coding practices with the use of well-tested libraries must be ensured.
It’s always a good practice to go for auditing, followed by the development to fix weaknesses in the smart contracts that are unidentified.
Auditing covers examining the whole smart contract code and resolving bugs, which will make it safe from malicious attack from hackers as well.
Breakdown Of The Auditing Process
Firstly, auditors conduct a security analysis to understand the background of the project.
It helps to gain knowledge of the language used to code, the logic of the contracts, the issues and solutions it aims to solve, code architecture and its different aspects among many others.
With a brief idea about the contracts, the contract is then tested on the testnets or any other testing blockchain network to check its performance.
Any deviations from the execution are noted, and the code is analysed for security threats. Here is a list of some potential vulnerabilities encountered by smart contracts that are caught and rectified through smart contract auditing.
- Timestamp dependency:
The timestamp dependence flaw allows the attacker to manipulate the block’s timestamp as per their needs to profit from that. Suppose the execution of the contract depends on the timestamp value; bad actors can manipulate them, which leads to financial losses.
- Loops and recursions:
The program code contains many loops and recursions. The problem here is the “infinite loop” called repeatedly, and the operations are stuck within the loops.
This leads to resource exhaustion as the program keeps running, causing DoS attacks. The same effect can be observed with the program recursions. They serve as the potential exploit medium for hackers.
- Function visibility:
When the visibility of the function in the contract, which has to be set private, is mistakenly kept public or vice versa is a threat to exploiting smart contracts. Whoever has access to the contract can use this flaw, resulting in contract code compromise.
- Redundant code:
This statement is inside a for loop, which iterates over the index of the array. If the array has length == 0, the loop is never executed, and this condition is never checked.
- Usage of transfer instead of safeTransfer:
The ERC-20 standard token implementation function returns the transaction status as a Boolean. It’s a good practice to check for the return status of the function call to ensure that the transaction was successful.
The developer is responsible for enclosing these function calls with require() to ensure that, when the intended ERC-20 function call returns false, the caller transaction also fails.
However, it is mostly missed by developers when they carry out checks. In effect, the transaction would always succeed, even if the token transfer didn’t. Attackers can drain the protocols using this vulnerability by calling the same function over and over.
- Missing address verification:
Certain functions lack a safety check in the address; the address-type argument should include a zero-address test; otherwise, the contract’s functionality may become inaccessible, or tokens may be burned in perpetuity.
- Reentrancy in crowd sale contract:
BuyTokens() is exposable for the re-entrancy attack as it allows the attacker to re-enter the execution cycle.
This re-entrancy attack would easily be possible if the collateral token gets malicious, and there can also be different possibilities.
- Automated Vulnerability Scanners:
The contract code is made to run through automated vulnerability scanners, which detail the vulnerability, its impact, severity and suggested fixes. For instance, the Rainbow Bridge successfully prevented a hack attempt on its platform in just 31 seconds. The prevention was successful such that the hacker lost 5 ETH.
This malicious transaction was easily encountered by Automated independent watchdogs
- Detection and Remediation:
Like the above-listed ones, smart contracts are analyzed for various other attacks manually and through automated tools to check if the performance matches the intended behavior.
If any discrepancies are noted the auditors offer the mitigation techniques in the initial audit report to the developer of the project. After the bug fix, the code is again verified, and the final audit report is released.
Finally
The code becomes all set to go on the blockchain network with less to no chance of bug existence. QuillAudits tops in the auditing domain delivering laudable services in securing blockchain projects.
In search of a leading blockchain auditing firm? Now you know where to seek it!
