Answers to Top 6 Burning FAQs on Smart Contract Auditing
“Smart contract” as a term was introduced by computer scientist and cryptographer Nick Szabo. According to him, modern institutions are transforming the conventional paper-based “contracts” with the help of the digital revolution. These contracts are called “smart” because they are far more functional than their paper-based ancestors.
These smart contracts run on a decentralized network such as Blockchain but in the recent past, smart contracts were the hot topics of discussion due to various external hacks on them. Though we can secure our smart contracts through auditing this has led to a series of debates and discussions resulting in various curiosities amongst the individuals. Though we cannot resolve many of the questions in the forthcoming sections we present answers to some of the most frequently raised questions on smart contracts audits.
Most frequently raised questions on smart contract auditing
Comprehensive and robust auditing of smart contracts from a trustworthy source ensures the security of the smart contracts. An audit identifies the flaws in the smart contract at the very initial stage and safeguards it from future attacks. Here we present before you the top 6 most frequently asked questions about smart contract audits:
#1: What, in a larger contrast the words “smart contract audit” convey?
- Smart contract audit refers to a comprehensive analysis of the code that may in the future lead to a vulnerability leading to financial loss.
- Auditors go through the code and analyze various aspects of the bugs, errors, and vulnerabilities and then come up with their initial report.
- This initial report is again put into the same cycle to fix those bugs and errors before making it a final push.
#2: Is audit mandatory before a token is allowed to trade on an exchange? And do throw some light on Automated Audit!
In most jurisdictions, the audit provides the verification required to begin trading of a new token on an exchange. In case of Automated Audit:
- Only advanced software is used to conduct audits.
- The downfall of using this approach is that automated tools may fail to detect complex security vulnerabilities.
- Though it can be used to save resources and time.
- Human intervention is important for cross-verification to explore the flaws.
#3: Are audits mandated without regulations a good choice to go for?
- It is advised to conduct smart contract audits in all cases to avoid any potential bugs.
- These should be taken care of as any sort of error may result in huge financial loss and may impact the reputation of your business.
- An audit from a trustworthy firm such as QuillAudits provides you peace of mind and gives you confidence about the safety of your smart contract.
#4: What are the possible flaws in a smart contract?
Well, there may exist several flaws that are still unknown to us, but by far from our past experiences we have listed out a few of them. These are the common vulnerabilities that one should take care of while deploying any smart contract:
- Re-entrancy Attacks
- Timestamp Dependence
- Integer overflow & underflow
- Denial of Service (DoS) Attacks, and
#5: How much time does the Audit take?
- Regarding time, there isn’t any fixed number to put for one as there are several factors that play a crucial role in carrying out an audit.
- Depending on the complexity of the project, the audit may take a few days, several weeks, or even months.
- Though we can increase the team size to get the job done, we also need to set aside time for the editing job to be done.
- As it is said that, “Hurry spoils Curry”, an auditing team working under time pressure may lag some crucial aspects behind.
- Any compromise on any of the verticals of the auditing may lead to a significant amount of loss.
- Therefore, it is recommended to take the appropriate time to complete the auditing process in the smart contract development lifecycle.
#6: What are the processes covered by Auditing?
Smart contract auditing takes into account independent assessment, verification process, detailed testing, and comprehensive reporting.
- Assessment involves looking into the proof of concept and the code for any technical and security vulnerability.
- To ensure that the contract meets the specific requirement, a thorough verification process is followed.
- Finally, after the implementation of changes, the contract is re-verified to ensure that the updated code has no anomaly concerning the initial code.
- At the end of it, the final phase is the preparation of the in-depth report of the audit that will comprise vulnerabilities found during various phases of testing.
Smart contracts are in a way leading the digital transformation witnessed by us. It is transforming various business verticals by giving it a new dimension of cost-efficiency and accelerated transactions.
These sets of code are not limited to just one sector of industry but can be used in finance, real estate, art, music, retail, supply chain, and many more.
And in all these implementations one thing is common, auditing of these smart contracts. As auditing ensures and enhances the security of the smart contracts thus ensuring the success of your project.