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Anyone interested in blockchain technology is probably already familiar with smart contracts. Security audits of smart contracts are a more complex topic. Basically, it is an essential part of the industry since even a single error can lead to a failure of the entire structure and tremendous loss of revenue, as has been proven time and time again.
What is a smart contract audit?
An audit involves a detailed examination of all components and features of a smart contract’s code, its intended purpose, and an analysis of its interaction with other cryptocurrencies. The main goal of a security audit is to analyze security issues, hidden vulnerabilities, bugs, and misconfigurations and suggest the best methods of fixing them.
It is critical to look at the security aspect of the smart contract because it deals with sensitive customer information or financial data. Therefore, audits are more complicated because tests are conducted to identify vulnerabilities in individual smart contracts and those that interact with each other, as well as existing integrations with other third-party software that could introduce extraneous vulnerabilities into the system. For the same reason, security audits are usually provided by independent third side auditors and include both documentation review, and tests with manual code analysis to cover all the bases.
Which projects require a smart contract security audit?
Any project that uses blockchain technology would benefit from a security audit, but let’s take a closer look at the specific types of projects that necessarily require such testing.
DeFi projects
The smart contracts used in DeFi projects are becoming increasingly complex and need a full security audit. DeFi, or decentralized finance, typically refers to financial applications linked using blockchain technology.
Tokens
Audits are also conducted on basic protocols to identify any possible vulnerabilities in the various applications. Crowdsales usually involve the sale of token contracts by forming a basic agreement that dictates the rules and regulations. It is designed to meet the project’s financial demands, after which the token providers become shareholders in the project.
Wallets and dApps
Many decentralized applications, or dApps, also include complex smart contracts that require proper auditing and security measures to prevent financial losses.
Four types of smart contract audits
Smart contracts can vary depending on the dApps that use them, so it’s essential to understand the unique characteristics of each and design security audits accordingly.
- Full security audit
It covers all aspects, including interactions with other smart contracts and third-party applications. First, a combination of automated and manual testing tools is used to identify potential vulnerabilities for basic operations, followed by a more in-depth audit. Manual testing techniques are essential here; they help understand the context in which the smart contract operates and its intended purposes, which must be kept in mind before testing for security issues. Simply using automated testing tools has risks.
- Basic security audit
This type of audit takes the least amount of time and is conducted by a single tester because it was designed with the preconditions of standard token contracts in mind. It is not part of the contract and covers fundamental aspects of operational needs. Projects with low participation in blockchain-based applications may choose this type of testing.
- Interim Audit
Commonly used for DeFi projects, it primarily analyzes the complexities associated with its smart contracts and ensures appropriate levels of protection for customer data and their finances.
- Continuous auditing
If your project is still in the development cycle, has a roadmap, and requires several iterations until the final release, this type of audit suits the requirements. The testers will follow the application through the development cycle for periodic checks and security recommendations.
Now you know the types of projects that can benefit from an audit and tests that need to be conducted to meet security requirements.
Anyone interested in blockchain technology is probably already familiar with smart contracts. Security audits of smart contracts are a more complex topic. Basically, it is an essential part of the industry since even a single error can lead to a failure of the entire structure and tremendous loss of revenue, as has been proven time and time again.
What is a smart contract audit?
An audit involves a detailed examination of all components and features of a smart contract’s code, its intended purpose, and an analysis of its interaction with other cryptocurrencies. The main goal of a security audit is to analyze security issues, hidden vulnerabilities, bugs, and misconfigurations and suggest the best methods of fixing them.
It is critical to look at the security aspect of the smart contract because it deals with sensitive customer information or financial data. Therefore, audits are more complicated because tests are conducted to identify vulnerabilities in individual smart contracts and those that interact with each other, as well as existing integrations with other third-party software that could introduce extraneous vulnerabilities into the system. For the same reason, security audits are usually provided by independent third side auditors and include both documentation review, and tests with manual code analysis to cover all the bases.
Which projects require a smart contract security audit?
Any project that uses blockchain technology would benefit from a security audit, but let’s take a closer look at the specific types of projects that necessarily require such testing.
DeFi projects
The smart contracts used in DeFi projects are becoming increasingly complex and need a full security audit. DeFi, or decentralized finance, typically refers to financial applications linked using blockchain technology.
Tokens
Audits are also conducted on basic protocols to identify any possible vulnerabilities in the various applications. Crowdsales usually involve the sale of token contracts by forming a basic agreement that dictates the rules and regulations. It is designed to meet the project’s financial demands, after which the token providers become shareholders in the project.
Wallets and dApps
Many decentralized applications, or dApps, also include complex smart contracts that require proper auditing and security measures to prevent financial losses.
Four types of smart contract audits
Smart contracts can vary depending on the dApps that use them, so it’s essential to understand the unique characteristics of each and design security audits accordingly.
- Full security audit
It covers all aspects, including interactions with other smart contracts and third-party applications. First, a combination of automated and manual testing tools is used to identify potential vulnerabilities for basic operations, followed by a more in-depth audit. Manual testing techniques are essential here; they help understand the context in which the smart contract operates and its intended purposes, which must be kept in mind before testing for security issues. Simply using automated testing tools has risks.
- Basic security audit
This type of audit takes the least amount of time and is conducted by a single tester because it was designed with the preconditions of standard token contracts in mind. It is not part of the contract and covers fundamental aspects of operational needs. Projects with low participation in blockchain-based applications may choose this type of testing.
- Interim Audit
Commonly used for DeFi projects, it primarily analyzes the complexities associated with its smart contracts and ensures appropriate levels of protection for customer data and their finances.
- Continuous auditing
If your project is still in the development cycle, has a roadmap, and requires several iterations until the final release, this type of audit suits the requirements. The testers will follow the application through the development cycle for periodic checks and security recommendations.
Now you know the types of projects that can benefit from an audit and tests that need to be conducted to meet security requirements.
