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How to audit an Ethereum smart contract?

Ethereum smart contract

In this article, we will focus on Ethereum smart contract audit, its services, the auditing methodologies, and the required steps. So, without further ado, let’s begin.

Ethereum Smart Contract Audits: Main Approaches

One of the crucial issues with the smart contract implementation is the necessity to properly audit smart contracts to assure that there are no security flaws and issues in the written code and that all contracts follow their intended behavior. Typically, each blockchain security assessment and smart contract audit service is unique and has different approaches and methods for a more customized and effective process. However, almost all smart contract security audits follow a particular order of steps and guidelines. Let’s review them below.

Manual Analysis 

The manual testing covers a comprehensive assessment of the developed smart contract code to identify all security vulnerabilities, flaws, and bugs that can result in data leakage or exploits. Hence, manual code review is essential for efficient smart contract auditing and remains the best way to find out the potential threats leading to reentrancy attacks, compilation, and other security incidents. Moreover, the manual review can easily discover even the most minor code flaws and hidden defects like the smart contract design difficulties that are overlooked in the development environment.

During the detailed analysis, the smart contract auditor analyzes the contract code line by line to ensure it works without disruption according to all the agreements and follows the original business logic. 

Generally, such an audit approach is more suitable for companies with an in-house development team and security experts specializing in auditing. 

Automated Analysis 

In contrast to manual analysis, where an auditor goes line by line to discover the vulnerabilities, automatic testing instead uses various automated tools and bug detection software for conducting an Ethereum smart contract audit. 

Automatic code analysis can come in handy to companies looking for faster and more cost-effective smart contract audit services. Moreover, the auditor’s team conducts sophisticated penetration testing alongside simple security vulnerabilities detection to find the exact locations and areas of current issues and mistakes. 

Most developers and security specialists building Ethereum smart contracts prefer Truffle for executing automatic code testing and analysis. Other smart contract testing tools designed for automated analysis include Populus (a python-based framework), Hyperledger Caliper, MyThrill, and Manticore.

Ethereum Smart Contract Performance Validation

The performance of smart contracts is straightly related to the quality of codes. Therefore, ensuring that your Ethereum smart contract is fully optimized before deployment is more than essential. 

For this reason, almost all smart contract audits include performance review and validation methods. In general, validation covers checking the code for security issues and errors that might affect or slow down other aspects of the smart contract’s performance. The auditing team initially starts a smart contract optimization by performing formal verification to check if the contract executes in a predetermined way that fulfills all the terms both parties decided when creating the contract.

Next, they analyze the smart contract for variables, as there can be various “triggers” and other actions. So, testing the contracts to ensure they can handle all possible contract variations is vital. 

Gas Analysis 

Decentralized Finance and Ethereum projects generally charge gas fees to cover the costs of transacting smart contracts, which vary depending on the design complexity of contracts. 

In most cases, gas fees are determined according to the operation codes’ number that the Ethereum blockchain executes. Therefore, to decide whether your smart contract needs optimization, you need to build a near estimate of gas costs it will require for the deployment process. 

Ethereum Smart Contract Audits

Smart Contract Security Audit Process

Generally, Ethereum smart contracts audit is not so different from any other smart contract audit process: the key steps and stages required for a thorough security audit are almost identical. However, the approaches and applied methods are slightly different, even if the steps are similar. So, let’s go on and review them one by one.

#1 Information Gathering 

Gathering a smart contract’s terms and specifications is the first step to a productive smart contract auditing process. In this stage, the project team collects the detailed documentation of the code, including design and architecture specifics, previously identified issues like an external call, overflows, etc.

#2 Manual and Automated Code Review

Once the information is gathered, the security team can move to the next phase of a smart contract audit and begin code reviews through manual and automatic testing. 

The testing phase helps identify current vulnerability details, code errors, disruptions, and weak spots that need urgent attention. Most auditing companies use both manual and automated tests for better results. 

#3 Initial Audit Report 

After discovering the existing issues through the test suite, the project team delivers an initial report of the conducted assessments. It generally includes a detailed vulnerability report and approaches that can be used for further stages and remediation. 

#4 Code Fixes

This stage covers fixing and resolving the security flaws to eliminate the risk of costly errors. Finally, after all the required changes are done, the team performs final testing and revision.

#5 Final Audit Report

All smart contract security audit services include a final report. It is an executive summary of the conducted audit and its results covering identified vulnerabilities and current issues, remediation solutions, and retesting options. 

The cryptocurrency space has faced a lot of changes and challenges during its evolution journey toward a robust digital ecosystem. It witnessed almost all revolutionary concepts on its way, from the first steps of blockchain technology development to firmly recognized decentralized platforms and apps. And one of the most accepted solutions it has given the world is smart contract implementation, which changed the entire traditional security system with a brand new digital transformation concept.

But are smart contracts fully secure and risk-free? The triumph and trending discussions on high-level security regulations of a smart contract are not a secret to anyone. However, firmly stating that it is entirely safe and secure will be a simple exaggeration. Like any other crypto service and product, a smart contract also entails a certain security risk percentage. That’s why performing a proper smart contract audit should be an indispensable part of overall security measures for every reputable company.

FAQ

How much does a smart contract audit cost?

Most companies’ price list ranges from $5000 to $25.000 depending on the difficulty of smart contracts code design, the project’s scope, specifics, etc. The price is also directly connected to the provided services and what it includes. So whether you want a more comprehensive assessment with expensive tools or a simple audit just providing a detailed report of found issues, the price can be higher or lower. 

How to become a smart contract auditor?

Programming knowledge and understanding of Ethereum blockchain basics and the Solidity Code Style Guide are the fundamental requirements you need to have for becoming a security auditor. However, if you don’t have any, there are various certification courses you can take to improve your skills in different programming languages.
You can also get an entry-level job in a security company for more real-world practice. 

What is the importance of an Ethereum contract auditing?

A smart contract audit allows companies to identify and eliminate the code’s critical vulnerabilities early in the development phase. This process helps prevent hacking attacks and security exploits that can result in serious financial and legal damages. Moreover, a passed audit can also serve as a reliability confirmation and increase the company’s reputation. 

What issues can be identified during smart contract auditing?

A comprehensive smart contract audit will help you detect all existing vulnerabilities and code errors of your project that can lead to severe security exploits and data leakage. It also evaluates the overall security of the project and offers appropriate solutions.