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Bug Bounty: Smart Contract Pentesting Overview

Bug Bounty: Smart Contract Pentesting Overview

Bug Bounty: Smart Contract Pentesting Overview

Blockchain smart contracts are great solutions for modern businesses since they help digitize all sorts of transactions and predetermine their procedures. However, these techs are not impeccable, first of all, from a security perspective. A smart contract can be hacked since any private chain of blocks has its vulnerable spots. Therefore, constant smart contract pentesting is necessary to detect any possible chain vulnerabilities to protect against various hacker attacks. One of its techniques is the implementation of bug bounty deals. Let us observe how it works and why one should run it.

The Essence of Smart Contract Bug Bounty Schemes

A smart contract can be seen as a digital instrument, an application, or a set of rules, the use of which makes payments and other operations quicker and more accurate. It usually frees all the chain members from excessive transaction fees and other inconveniences. Many large corporations and international banks use blockchain smart contracts because of their main benefit: they save business costs.

Like any computer system, smart contracts may have numerous bugs. Since their procedures include the execution of various functions and involve participants’ funds and data, they attract right-minded users and all sorts of cyber thieves and hackers. The task of protecting smart contracts and providing them with enough security is of such great importance that numerous organizations and soft developers offer so-called bug bounty deals and engage skilled individuals in penetration testing processes for smart contracts.

smart contract bug bounty deal or program is just a subtype of the bug bounty. That is, one joins the program and makes money from disclosing the weaknesses of a given blockchain smart contract. Surely, a successful exploit requires specific knowledge in programming. For instance, consider the Solidity smart contracts employed in Ethereum blockchains. Here, one should know the Solidity language.

Can You Earn a Living off Bug Hunting?

Certainly, you can. An average bounty may bring you $250-$500. Your payout may be incredibly high when you are lucky to disclose a critically unsafe weakness in a smart contract. However, smart contract bug hunts require patience. They won’t load you with money at once. Moreover, factor in that other hunters will join the same hunt with you, so you need to be the first to get a reward.

Bug Bounty Program Rewarding Systems

Almost everyone can become a bug hunter in a bug bounty program. Various enterprises and soft developers post such programs supplied with detailed explanations of rewards, restrictions, and other rules on their websites. How much can a bug hunter earn by participating in such a deal? The potential is indeed huge.

Be aware that smart contract bugs are paid higher. But rewards mainly depend on a sort of weakness and its security impact. So, the higher the risk it bears for the blockchain, the more will be the reward. A common bug-hunting program suggests four basic threat level rewards, from low level to a critical one. The latter may reach a million dollars. However, some issues usually cannot qualify for any reward.

High-priority Bug Issues

What are the highest paid bugs? Surely, these are weaknesses that allow direct theft or loss of user funds, repairing of which may help to improve the smart contract’s code as well. We have compiled a list of bugs most companies tend to prioritize:

  • Financial threats like flash loan attacks
  • Congestion & scalability errors
  • Re-entrance problems
  • Authentication bugs and other logic errors
  • Solidity smart contract details overlooked
  • Unshielded internal or debugging interfaces;
  • Composability vulnerabilities
  • Novel governance attacks
  • Missing access controls
  • Consensus failures
  • Cryptography problems like weak encryption susceptibility or weak randomness errors and some others

Mind that you get one bounty for disclosing multiple vulnerabilities caused by a single problem.

Out-of-scope Vulnerabilities

Consider the following blockchain weaknesses that bug bounty programs tend to exclude from their reward lists. Reporting vulnerabilities like these won’t bring you any profit:

  • Sybil attacks
  • Previously disclosed and resolved as well as unresolved weaknesses
  • Previously known vulnerable libraries (no Proof of Concept)
  • Attacks the bug hunter exploits, which cause damage to the system
  • Attacks that demand access to damaged keys or authority rules
  • Damage attacks requiring access to governance or other privileged addresses
  • Blockchain incorrect data supplied by related parties’ oracles
  • Attacks requiring MITM or direct access to a chain member’s gadget
  • Basic economic governance attacks/governance funds theft
  • Shortage of liquidity
  • Best-practice critiques

Restricted Activities

Pay thorough attention to the activities that most companies offering bug hunting deals will regard as abuse. Any bug hunter who is going to report vulnerabilities within a blockchain anti-bug deal should avoid the following behavior:

  • Do not take tests using mainnet/public testnet contracts.
  • Any tests with the use of a third-party smart contract or pricing oracles are prohibited.
  • Do not use any third-party apps, systems, advertising networks, SSO providers, etc.
  • Any social engineering attacks against blockchain members are prohibited.
  • Do not take any automated service test that generates significant amounts of traffic.
  • Public disclosure of unpatched vulnerability issues is prohibited and won’t be rewarded.

Surely, all these lists are far from being complete. Every program has its specifics that should be learned attentively before joining it.

Other Rules

The level of rewarding vulnerabilities also depends on how accurate the bug hunter is with reports. To succeed in any bug hunting deal for a smart contract, be sure to comply with these general rules:

  1. Provide detailed reports so that anyone can repeat the issue procedure.
  2. It is recommended to report one bug at once.
  3. When several reporters have submitted the same bug at once, the one who sent an exhaustive, step-by-step report will be rewarded.

Instead of a summary, consider one more piece of advice any bug hunter should remember. Do not take smart contract bug hunts as a source of easy and fast money. You will have to practice before this activity brings you substantial gains. Always act in good faith so that your work does not violate anybody’s data or damage any services.