A smart contract encodes an agreement's terms, prohibitions, necessary acts, and fines into codes and then executes these codes when the circumstances are met or broken. Hence, it is essential to be aware of the potential bugs in the Contracts or any errors. The smart contract audit is necessary to protect investments made through them, as they are autonomous and can allocate high-value resources between complex systems. 

What is Smart Contract Audit?

Asmart contract auditis a critical step in guaranteeing the safety and dependability of blockchain applications. It involves an in-depth evaluation of the contract's code to identify security vulnerabilities, coding flaws, or inefficiencies and to pinpoint potential solutions. Given that the code is the law for Smart Contracts, rectifying the mistakes can be costly and time-consuming. For this reason, it is critical to engage the services of a Smart Contract auditor to ensure that the coding is secure and fit for purpose.

How Can You Perform A Smart Contract Audit?

Define the project's scope: Gathering all relevant documentation is the first step of an audit. This process encompasses the white paper, codebase, and other materials related to the Smart Contract. Analyzing the design documentation allows the auditor to gain an overview of the blockchain application. Without access to the documentation, the auditors cannot comprehend the purpose of the Smart Contract. Documenting the project specifications is a vital element of the auditing process. Auditors should know the desired effects to ascertain that the code is functioning.

Unit Testing: The developers write unit test cases. Audit professionals then review these tests to ensure the Smart Contract functions as expected. Testnets and auditing tools properly assess the risk associated with the Smart Contract. Moreover, tests provide access to supplementary documentation that further describes the intended project functionality to auditors.

Code Review: An audit team analyzing the code should consider project specifications again and any other relevant documentation to confirm that the code is functioning as intended. The use of both manual and automatic auditing techniques ensures adequate review of all components.

Initial Report: The auditor produces an initial report highlighting any errors encountered. The person then distributes the document to the project development team for their comments and necessary amendments. This undertaking can be laborious and complex but fundamental for the project's success. By addressing all matters, one can guarantee that their smart Contracts are ready for launch.

Final Report: After completing the necessary tests and analyses, both manual and automated, the auditors produce a comprehensive audit report. Once any resolutions to the issues reported have been taken into consideration, the final report is made available. This audit report is a valuable resource to the project team and all other stakeholders associated with the application.

Why Do You Need A Smart Contracts Audit?

Security: In the form of digital assets, smart contracts can store significant amounts of value. Auditing ensures that the Smart Contract's code is secure and capable of withstanding potential breaches or flaws that could result in losing funds or data. 

Compliance: Smart Contracts may be required to meet legal and regulatory obligations. Auditing can guarantee that the Contract satisfies these criteria and is legally enforceable. 

Transparency: Smart Contracts intend to be transparent and immutable. Auditing can ensure that the Contract code is transparent and secure. 

Functionality: Smart Contracts must function accordingly. Auditing can help ensure that the Contract code works accurately and complete the expected tasks.

Smart Contract Audit Practices

Penetration Testing and Regular Audits: It is essential to perform pentesting regularly, as hackers constantly attempt to discover vulnerabilities or security weaknesses, even if the system appears faultless. Utilizing trusted tools, such as MynthX and Mythril, to conduct periodic smart Contract audits can help to identify potential security issues.

Automatic Security Scanner: Employing an automated security vulnerability scanner can identify bugs in the code that are likely to cause security vulnerabilities and help to protect against a multitude of attacks. The Ethereum Foundation supports an open-source security scanner for EthereumSmart Contracts, Securify, which can be utilized for this purpose.

Security Checklist: Develop a well-researched checklist based on industry security practices and update it depending on work experiences. Sticking to multifactor authentication, employing SIEM, and imposing IAM control are all critical considerations. You should also establish a list of trustworthy blockchain tools. You can, for example, include the SWC registry with other applicable solutions.

Test the contract in different environments: Testing the Contract in different environments is a critical step in the deployment process. It can help identify issues before the Contract gets deployed. It is recommended to test the Contract on both testnets and mainnets before deployment. Doing so can save time and effort by ensuring the Contract functions as expected before deployment.

Check for compliance with different standards: There are various industry standards for Smart Contracts, such as the ERC standards for Ethereum-based Contracts. It is essential to ensure that the Contract complies with any relevant standards for the given application to ensure the reliability, security, and structure of the code. Consequently, a thorough code review is needed to confirm that the Contract complies with the relevant standards.

Wrapping Up

Carrying out a security audit of a smart contract is essential to evaluate the protocol's logic, architecture, and each line of code to detect potential vulnerabilities or risks. The auditor's recommendations are a significant component of the report. Recent events have demonstrated the importance of smart contracts audit prior to deployment and launching a project. We strongly advise that multiple independent audits be conducted to guarantee the utmost security.