A Beginner’s Guide To A Smart Contract Security Audit – Mudcreep

Smart contracts are the foundation for building decentralized applications hosted on a blockchain. As the web3 sector exploded in recent years, the world has witnessed the deployment of smart contracts to fulfill various use cases and attract people into the decentralized finance sector.

Code is critical in the blockchain sector because it can make or break a project. A malicious actor could exploit a little bug to steal user funds, which developers obviously want to avoid. That’s why every smart contract needs a security audit to ensure it’s free from exploitable bugs and errors. This article is a beginner’s guide to such an audit.

What is a smart contract audit?

It is a meticulous process of reviewing a contract’s codebase to identify and fix potential vulnerabilities. It involves blockchain experts and programmers analyzing each line of code to ensure it’s free from errors that a malicious actor could exploit. It also involves detecting and fixing architectural and logical inefficiencies in the codebase to make it run as efficiently as possible.

Any contract deployed on a blockchain is publicly available. Anyone can view the underlying code, and malicious actors often examine contracts to seek any little bug they can exploit. Errors have led to billions of dollars of losses, which anyone wants to avoid. Hence, when an individual or company creates a smart contract to facilitate blockchain transactions, an independent audit is required to ensure the codebase is safe before deployment.

The contract auditing process

A smart contract security audit follows the below process:

Step 1: Documentation

The project developer provides detailed technical documentation about their project. The documentation includes the codebase, whitepaper, diagrams visualizing the protocol’s inner workings, and other relevant technical information.

Documentation allows the auditor to study and understand the project, which helps identify and fix errors. Without documentation, the auditing experts will be navigating through a confusing web of information, which takes more time and effort and increases the probability of making mistakes.

Step 2: Formulating an attack model

After studying and understanding the protocol’s technical experts, security experts develop hypothetical attack models against it. They imagine many ways a hacker can exploit the protocol and ensure the code is protected against such attacks.

Step 3: Line-by-line code review

Programmers dive into the codebase, examining each line for vulnerabilities and errors. This review doesn’t only look at security bugs. It also involves checking if the code’s structure is efficient and delivers optimal performance.

Step 4: Auditing comments

As the auditor navigates through the codebase, they leave comments on any issue they identify. They use color-coded comments and bookmarks to highlight their observations and insights for the client to take action.

Step 5: Reporting

The auditing team compiles a final report highlighting any vulnerability identified in the code base. The vulnerabilities are classified as high, medium, or low-risk to help the development team set priorities for fixing them. The report also includes recommendations from the security and programming experts to solve the identified issues.

The final comprehensive audit report gives the project owner honest details about their code base and what they can do to solve the vulnerabilities. With it, the owner can get to work and fix the vulnerabilities as quickly as possible.

Common errors identified in contract audits

Here are some common errors identified when auditing blockchain protocols:

  • Syntax errors – Errors in the code structure (punctuations, figures, labels, etc.) that hinder its functionality.
  • Integer overflow and underflow – Errors that occur when the code tries to execute an arithmetic operation exceeding the maximum or minimum number represented by the data type.
  • Data exposure – Bugs that can expose sensitive protocol data to the public.
  • Timestamp dependence – A vulnerability that takes place when the code relies on the value of the block timestamp to execute operations.
  • Access control – Flaws in data access control allowing malicious actors to manipulate the contract’s operations.

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