Essential steps for Successful smart contract audit

The blockchain is considered to be secure, immutable and self-executing. Let’s put our focus on the ‘self-executing’ part. The conditional automation in the blockchain is affected by smart-contracts. Smart contracts are small pieces of codes that contain all the conditions that are required for an action to be executed in a blockchain.

While the innate properties of a blockchain remain by default, it is the smart contracts that refine the utility of the blockchain. Auditing of the smart contract by authorized personnel becomes a thing of paramount importance. A smart contract with loopholes can result in millions of dollars being lost. A meticulous audit by a professional can mitigate the risks involved by a considerable extent.

Smart contract auditing

Here’s how you perform a complete audit of your smart contract:

The Self-Check:

There are certain basics and best-practices of coding that do not essentially need external validation or valuation. These basic checks not only throw light on what needs to be audited but also gives you a clearer vision of the goal and requirements of your smart contract. The code-formatting should be verified using a linter, and the compiler should not point to any warnings on the code. It is to be understood that the tests until now do not foray into the business and legal-level fine-prints of the smart contract, but only the technical part. It is highly recommended not to proceed with any further coding after this point.

Handing Over the Code:

There are many ways to hand over a specific section of the code for your smart contract and it includes straightforward ones like a public GitHub repository. The smart contract audit can point to a particular git commit ID to isolate the audited smart contracts. Another way to go about this process is to deploy the smart contract on public networks like report Ethereum (ETH) Blockchain Explorer to verify the code.

Inspecting the Code:

The defined specifications can help the auditor check the business logic of the smart contract. The checks typically scrutinize the implementation of use-cases, the execution-path breaking the smart-contract, the minor missing elements that can create a domino effect on the contract, and above everything if there are loopholes in the smart contract that someone can exploit.

After all these, the auditor may choose to deep-dive into the code and analyze it from different perspectives viz. business, security, and best practices.

Security - the Holy Grail of Smart Contracts:

One of the core reasons a smart contract audit is in place is because all the security vulnerabilities need to be isolated and patched. Considering the value of information that smart contracts hold, there are chances that even a minor lapse in security can amplify as it cascades, resulting in millions of dollars lost. These bugs are hard to find, and it requires a deep and holistic understanding of both the business and the code to pinpoint these vulnerabilities. There are instances like the DAO hack that not only resulted in a monetary loss but even a split in the Ethereum community.

There might also be instances of incorrectly set privileges that bestow undue powers to certain unverified and ineligible accounts. There are chances that attackers might exploit the allowance mechanism. It might not always be possible to seal all the dripping spots, but keeping a constant vigil on the latest violations show what to learn and what to focus on.

It all comes back to the code!

The audit, after all, all the initial checks, can also have a few recommendations on the code-front. In fact, there are clients who eagerly expect audit-comments on the code, including on quality and implementation of best practices. It is widely accepted that the simpler the smart contract, the lesser the bugs - it automatically makes the smart contract better. This audit helps get rid of certain redundant and obsolete pieces of code. If all this wasn’t enough, there are smart contract writing guides like theEthereum Smart Contract Best Practices.

How does the audit report look?

A good audit report should be detailed and should contain a few key sections:

• The background of the audit that showcases the description of the audit request. It can either be about the specifications of the requirements or about the version of the code under audit.
• The core report highlights the issues in the smart contract. The issues can be sorted either by severity viz. critical, medium and low, or by segments viz. business, security and best practices.
  
  The issues should be properly described with a title, severity, description and a recommendation, making it easy for the developers to address the issues.
• A section on recommendations that elevate the greatness of the smart contract is always welcome. It might even include suggestions like delaying the production deployment until the critical issues are resolved, or running a contest for finding bugs, commonly known in the crypto world as ‘bug bounty’

The Essence Of Audit… and The Pre-Essences Before Audit

It all comes down to priorities! People and companies working on a blockchain are aware that once the smart contract is on the blockchain, there is no way it can be changed. It is not just a good practice, but a mandate that all the outstanding issues, especially the ones regarding security and loopholes, are resolved before the smart contract goes live! Making the results of the audit public before your ICO or STO launch only increases the credibility of your offering.

The Services of Blockchain App Factory

As a blockchain app development company, we understand that smart contracts are quite important, and an audit surely increases the appeal of your smart contract. On one side, we help you create audit-perfect smart contracts for your blockchain, and also audit your existing smart contracts to make them better than what they already are!!