Smart Contract Security Audits

A smart contract is commonplace in the DeFi ecosystem. In fact, if you’ve invested in a blockchain project before, there’s a high chance that the smart contract review influenced your decision. Typically, these contracts are meant to execute an agreement without needing any party’s time and involvement.

The setup of a smart contract is fairly simple: there’s a program on the blockchain that only runs or executes an action when the conditions are met. So, once party A fulfills its part of the agreement, the program runs automatically, without the need for party B’s involvement or approval. As a result, smart contracts hold the capacity to save all parties involved a ton of time.

Let’s say that if party A fulfills a service or delivers a product, party B releases the payment on the blockchain. And thanks to smart contracts, instead of having to confirm if the product is delivered and send the payment manually, this process is automated as soon as the conditions of the smart contract are met.

However, if the contract isn’t written out properly, both parties can run into some trouble along the way, and that’s why you need a smart contract audit before proceeding further.

While smart contracts are secure since they are on the blockchain, they don’t come without any vulnerabilities. These vulnerabilities are the reason you need to properly audit a smart contract to detect any lapses in the code to ensure that you, your partners, and all other parties involved are safe.

The first vulnerability is the wrong execution of certain codes. For example, small typos in the code can have significant consequences. If developers don’t catch these mistakes before the contract goes live, then it’s only a matter of time before something goes wrong.

On top of that, naming issues and mishandling exceptions can leave the code very vulnerable. While these mistakes and vulnerabilities are common, a high-quality smart contract audit can easily fix them, which is why it’s necessary before putting a smart contract on the blockchain.

Some other common smart contract vulnerabilities include:

• Using the block hash function
• Too much dependence on execution order
• Wrong calculations of token amounts
• Reentrancy

One of the key benefits of getting a smart contract audit is getting an expert team to examine your contract and potential vulnerabilities. From there, they submit a report on these vulnerabilities with recommendations for fixing them.

Some companies only provide reports with no proposed solutions to any of the issues they found. With Legal Kornet, you get proper advice and guidance on how to fix security vulnerabilities that have been found during the initial audit.

Once you make the corrections, we will look at the contract again to catch any other vulnerabilities before it goes live. That way, when you place your smart contract on the blockchain, you know that it’s free from issues and will run as intended.

Smart contract audits are a necessary step in writing and executing a smart contract. In its most basic form, a smart contract is an in-depth review of the contract’s code. Once the code is reviewed, the auditors send their comments to the organization running the contract so that they can make the appropriate corrections before putting the contract on the blockchain.

This ensures that no stone was left unturned when coding the smart contract and that all aspects of the smart contract are fully operational. Smart contract audits are typically divided in four phases, which include:

• Initial Analysis
  During this phase, the auditing team closely looks at the contract. This is the stage where they detect anomalies or aspects within the smart contract that need to be reviewed before the contract goes live on the blockchain.
  
  
• Presentation
  After analyzing the smart contract in depth, the auditing team will then present their findings and comments to the organization responsible for the smart contract. This is the stage where the organization responsible for the contract will learn about what needs to be reviewed and fixed before any further steps are taken.
  
  
• Actions
  After fully grasping what needs to be done before the contract can go live on the blockchain, the organization in charge can then make the necessary changes as per the recommendations of the auditing team.
  
  
• Final Analysis
  Once all the corrections are made, the reviewing team must look at the smart contract again. That way, they find any other potential issues and let the client know before they finalize the contract and put it on the blockchain.

Theoretically, it’s possible to perform a smart contract audit yourself. However, performing the audit in-house can be very costly and take a lot of time. On top of that, there may be some issues and vulnerabilities that you won’t notice due to your lack of experience or understanding of what goes into a smart contract audit.

This is why hiring a qualified, and dedicated auditing team is necessary before running a smart contract. Legal Kornet ensures that no stone is left unturned and that once the smart contract goes through the hands and eyes of our experts, the smart contract will operate exactly as it should.

Audits are an essential part of running a smart contract. This is because smart contracts usually run on codes provided by GitHub. And when coding, it’s easy to miss out on certain key details that can not only impact the effectiveness of the smart contract but also lead to more serious consequences.

Besides, investors won’t take a smart contract seriously unless it’s been audited. An audit ensures that the contract has been properly coded and there are no lapses. That way, they can rest assured that the contract will fulfill itself once they accomplish their end of the deal.

Here are some of the additional benefits of conducting an audit of your smart contract:

• Checking Gas Efficiency
  Certain networks like Ethereum are notorious for their high gas fees. And sometimes, smart contracts will perform various transactions (that are usually unnecessary) before meeting their ideal goal. So, to bring down transaction costs, during the audit, we will perform a comprehensive review of the smart contract to ensure that it is as gas efficient as possible.
  
  
• Finding Platform Flaws
  While keeping gas costs to a minimum is important, the main reason behind smart contract audits is to determine the security of the smart contract. During our audit, using our vast knowledge and experience, we’ll ensure that there are no flaws or cracks in the contract that can have significant consequences further down the line. Some of the flaws we focus on are badly structured code, integer under and overflows, reentrancy issues, and more.
  
  
• Determining Security Vulnerabilities
  While the blockchain is secure, there are some instances where a DDoS attack can target smart contracts. Our smart contract audit involves a deep dive into any potential vulnerabilities of a contract to ensure that every party is safe when entering the contract.

The cost of a smart contract audit can vary depending on several factors. While these audits are usually done for large contracts that involve millions in cryptocurrency, they can also be performed on smaller contracts. On average, Legal Kornet smart contract security audits fall in the $5000-$9000 range. To get a tailored quote, get in touch now.

However, rest assured that these audits are worthwhile. When working with smart contracts, there is usually a lot of currency at stake. So, investing in an audit, while it may cost you a fair amount up front, can end up protecting your contract from vulnerabilities that could lead to larger losses down the line.