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Dr. Stylianos Kampakis
Dr. Stylianos Kampakis

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Smart Contract Audit: What To Look For While Auditing Smart Contracts

With the booming crypto economy and TVL figures creating bigger and newer records every month challenging security, the imperativeness of smart contract auditors has become even more significant. There are so many applications of blockchain technology, helping the projects utilize the technology and add some new value to the existing ecosystem. As a result, it has become easier to handle user funds.

We must also recognize the security breaches that have become a significant part of our day-to-day lives. Any lax in security will give disastrous results, as proven by the recent exploits in October. Popularly called 'Hacktober,' October 2022 has been called the "worst month" for crypto investors.

It wouldn't be an exaggeration to say that the crypto space has become a den of thieves and exploiters. Thus, it makes the security of funds paramount to enhance the project's integrity. And November would be no different, with so many attacks already happening, giving it a rocky start! In this situation, relying upon a credible blockchain security company can only prove to be a relief.

Smart contract audits come into play when determining the functionality and security of smart contracts. You can perform it by in-house auditors or third-party organizations, among which the latter is mainly preferred. This ensures objective analysis, adding value to the project's credibility.

Preparing For The Smart Contract Audit

Once the team is done building the blockchain app, they will also make sure that everything goes as intended and no surprises are waiting for them around the corner.

So, they roll out the smart contract to the blockchain security audit company, which assigns it to their experienced auditors. Irrespective of your years of experience as an auditor, it is a must to stick to a checklist for carrying out the smart contract auditing process.

The Smart Contract Audit Checklist

The complete auditing process can be broken down into more minor, distinct phases at the helm of one or more erudite auditors.

The first pilot phase is the preparation stage. Here, the auditors try to garner as much information as possible from the clients as per their required format. Undoubtedly, this phase forms the foundation for the entire smart contract audit process.

These are the checklists that smart contract auditors follow.

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Step 1: Understand the Project

In this step, the auditors will ask for all the information related to the project from the developers. This includes detailed documentation of the project, its components, and the technologies used.

Step 2: Establish a Development Environment

With the information given by the project's founders, the audit team will now establish a development environment wherein they will let them know about all the necessary software packages that would suit the technical configurations of the given project.

Step 3: Access to the Code

With the established development environment, the auditors now view the actual code. The best practice is to ask the project developers to give access to the code over repositories like GitLab, GitHub, and BitBucket that are widely used and reliable. If the auditors get a clean codebase with proper formatting according to the set conventions, it makes the work way easier.

Step 4: Verify the scope of the audit

Every audit has a different scope- while some clients might want you to audit only some selected portions of the project, others may ask you to cover the entire project. To make sure that you do not execute tasks beyond your purview, you need to prepare a verified audit scope and share it with all the auditors who are involved in the process.

Following is the information that you need to include in this scope.

  • Repository link

  • Branch name

  • Commit

  • Path to contracts that have to be audited

In case, all the contracts in a specific repository have to be audited, then you can omit the last point. However, there may be times when there would be some critical code that is beyond the scope of the audit. In such cases, you need to mention: β€œthis audit covers only contracts from the scope section. Therefore, the repository contains contracts out of scope and cannot be verified.”

Step 5: Check the functional and technical requirements

These aspects are there in the documentation that the client provides in the first step itself. However, it is mandatory to re-check whether you have both of these requirements with you.

Most of the projects that use smart contracts have cross-contact dependencies. They should be noted down, and you should ensure that you also have information about them from the client in the form of system role descriptions and cross-contact dependencies.

Step 6: Access to unit tests

It is true that auditors create the test cases, but if the developers provide you with their test cases, then you will get a better understanding of the code. As you will be looking at the project from the developer’s point of view, you would be able to contribute additional validations.

The audit team will be better prepared to examine every area of the audited smart contracts after the preparation step is complete.

The team will start by going over every line of code before subjecting the contracts to a number of manual and automated testing methods. The audit team will next examine the generated data for problems and classify them according to the severity in the report.

Wrap-up:

Smart contract auditing is the best way to eliminate the vulnerabilities in the early stage itself, as an effective solution against all the security branches happening these days. Though the process is a bit complicated, sticking to the above checklists, and following them diligently will help you complete it without any back and forth.

Relying on the smart contract auditors will give you an insight into the technicalities and nuances that they keep in mind while auditing a project. So, what are you waiting for? Hand over your project to the one who not only knows how to do it but can also save a lot of your time and money!

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