Security Audit

What is Smart Contract Security Audit and Top 5 Best Practices

Updated on: June 28, 2022

What is Smart Contract Security Audit and Top 5 Best Practices

Article Summary

Smart contract security audit is a central concern for companies using them. Learn all you need to know to get started with smart contract security.

What is a Smart Contract Security Audit?

In a nutshell, a smart contract security audit is a set of programmed agreements that consist of functions and data that get automatically executed whenever a network tries to access it for a transaction requested by a user.

Introduction

Today, smart contracts are becoming at the forefront of Blockchain technology. They are catering to almost every industry segment with a variety of applications and transaction use cases. From Finance and IoT to the Supply Chain and Music industry, the implementation of smart contracts applies everywhere in our daily life. 

If you think about the transparency of smart contract implementation, it becomes visible for all the users of a said blockchain. However, there can be a situation where the security loopholes and vulnerabilities also become visible. And these potential security weaknesses can be exploited by hackers or cybercriminals to further damage an organization’s smart contract, which can ultimately result in loss of revenues and customer data exposure.

Therefore, to prevent such situations, it is important to understand how smart contract security functions, and learn about its proper implementation and other aspects of securing a smart contract-based platform against cyberattacks and hacking attempts.

So, let’s dig in.

How does it work?

A smart contract is a type of Ethereum Account that runs on a blockchain-based platform known as Ethereum blockchain. An Ethereum Account consists of ether (ETH) as a balance. Users’ accounts can communicate with a smart contract and access the data by submitting a transaction. This transaction executes a predefined function on the smart contract which gives the user access to the data present in a smart contract.

A computer scientist, lawyer and cryptographer Nick Szabo primarily defined smart contracts as “Building Blocks for Digital Markets” back in 1996. He stated that the “smart” in a smart contract is “because they are far more functional than their inanimate paper-based ancestors. No use of artificial intelligence is implied.”

Further, Nick terms smart contract as a digital vending machine. A vending machine that operates through a “contract” gets executed whenever a person puts money in the machine and gets the product.

For example: To get a drink from a vending machine:

money + drink selection = drink dispensed

Of course, smart contracts are used in a more sophisticated way while doing cryptocurrency transactions. 

Make your Blockchain solution the safest place on the Internet. Secure it using this ultimate blockchain security checklist.

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What are the different types of Smart Contracts?

Smart contracts are created and deployed over a network using programming languages such as Solidity and Vyper. And you need to have enough ETH for the deployment process (using Gas). 

Smart contracts are classified into 4 different types according to their usage by programmers for building applications.

Here are the types:

  • Decentralized Autonomous Organizations (DAOs) – involve a set of rules established and controlled by organization members and not influenced by external entities.
  • Smart Legal Contracts – involves strict legal resources (also known as legally enforceable smart contracts).
  • Contracts of Applied Logics (ALCs) – built on a decentralized network that combines a smart contract with the front-end user interface.
  • Distributed Applications (daaps).

Recent Cyberattacks on Blockchain/Smart Contracts

Following recent events shows that the smart contract as blockchain technology is not immune to cyberattacks and vulnerability exploitation:

  • In 2017, $150 million worth of ETH was stolen from an organization named Parity technologies due to a critical vulnerability present in their Ethereum smart contract.
  • In 2016, a DAO called Genesis DAO was compromised by a hacker(s) exploiting a security loophole in the system. Here, hackers stole $50 million worth of ETH from Genesis DAO’s crowdfunding investors.
  • In August 2021, one of the biggest cryptocurrency heists happened. Hackers stole $613 million worth of digital currency from a company named Poly Network. They exploited a vulnerability in the digital contracts Poly Network uses.

How can Smart Contracts be secured?

One of the main reasons behind organizations using smart contracts technology is its strong security posture. It acts as a lawyer (with an agreement) between two parties involved in a transaction. 

However, there have been many instances where the platforms running on smart contracts were compromised due to the unhealthy implementation of smart contracts during SDLC, improper security measures, and vulnerability exploits.

Smart contract security efforts start before writing the first line of code – during planning, design, and development processes and end with securing against cyberattacks and potential vulnerabilities such as re-entrancy, front running, ETH send a rejection, integer overflow/underflow, DoS, Insufficient Gas briefing, RCE and many others mentioned in Smart Contracts Weakness Classification Registry (SWC Registry)

Here are some points on how you can secure smart contracts against attacks and vulnerabilities:

  1. Write a more secure smart contract code with best practices followed by leading organizations.
  2. Periodically perform smart contract security audits and penetration testing.
  3. Follow a blockchain security checklist.
  4. Run automated security scans on a smart contract.
  5. Use the trusted blockchain tools for design, development, security, auditing, and exploiting.

Let’s now discuss the above five points in more detail:

1. Smart Contract Secure Coding Best Practices

Smart contracts are developed using different programming languages such as Solidity, Vyper, Go or Java, etc. It is important to follow all the identified and publicly available resources for coding a secure smart contract. Here are some best practices that you can follow during your smart contract design, implementation, and deployment phases:

  • Clearly describe what the smart contracts do, and any assumptions on the code base in plain English.
  • Generate schema and architectural diagrams using Slither printers.
  • Do thorough code documentation using Natspec format (for Solidity).
  • Keep as much code off-chain as you can.
  • Document the procedures of migration or upgrading before the deployment.
  • Function composition – write small and meaningful functions, split the logic either through multiple contracts or grouping similar functions.
  •  Inheritance – try to shorten the inheritance tree, you can use Slither’s inheritance printer to check the hierarchy.
  • Implement logging of all events and operations.
  • Be aware of the warning section mentioned in Solidity’s documentation.
  • Use well-tested libraries.
  • Avoid copy-paste and use a dependency manager.
  • Write detailed unit tests.
  • Write customer checks and properties with Slither, Echidna, and Manticore.
  • Use the recommended version of the programming language compiler
  • Regularly monitor your contracts after deployment.
  • Implement security for the wallets of your privileged users using cryptography.
  • Craft an incident response plan. Smart contracts can be hacked.

2. Perform Smart Contract Security Audit and Pentesting

Even though your smart contract is bug-free and securely developed, hackers can always find a way to exploit potential security loopholes and vulnerabilities. They can either compromise a smart contract or an entire blockchain platform and steal thousands and millions worth of cryptocurrency. 

A periodic penetration testing and security audit for a smart contract is the solution to this problem. Security audits and pentesting helps you uncover these potential vulnerabilities in your system and gives you time to fix these weaknesses before a hacker(s) tries to exploit them and hack your platform.

Here are some steps you can take to do a smart contract audit and pentesting:

  • Do a static analysis of your code to identify style inconsistency and vulnerable code.
  • Perform security analysis for your smart contract using trusted tools like Mythril, MythX, Echidna, Oyente, Manticore, ERC20 Verifier.
  • Test for all the vulnerabilities mentioned in the SWC Registry.
  • Organise a bug bounty program during testing. Use a testnet like Rinkeby.io or Kovan. 
  • Do the penetration testing in-house if you have an experienced security team available in your organization.
  • Generate a detailed report on identified vulnerabilities in your system and recommendations for fixing those vulnerabilities.
  • If your internal security team isn’t capable of conducting a security audit or pentesting for your smart contract then get the external security auditors that can do the job for you.

We at Astra Security helped many blockchain platforms with security audits and penetration testing for their smart contracts and blockchain apps. Our pentesting tool Astra Pentest is easy to understand and offers a centralized management dashboard for the security and management teams. Further, our highly professional and certified auditors make sure no single vulnerability or security loophole goes unnoticed.

3. Follow a Blockchain Security Checklist

It’s always a good practice to follow well-researched and practically implemented checklists for the security of your blockchain. 

Download this exclusive Blockchain Security Checklist

Also, do check these related resources:

4. Use Automated Vulnerability Scanners

Using an automated security vulnerability scanner can help you with the security analysis of your smart contract. It can help you identify bugs in the code that can lead to security vulnerabilities and can also help you prevent a variety of attacks. You can use this open-source security scanner for Ethereum smart contract which is supported by Ethereum Foundation called Securify.

You can also use Astra’s Vulnerability Scanner. It learns from new CVEs, bug bounty data & intelligence gathered from pentest that Astra’s security engineers conduct for businesses in varied industries.

smart contract security

The ‘Vulnerabilities’ section in Astra’s Vulnerability Scanners provides a detailed analysis of every single vulnerability discovered in the scan results:

  • Details of Vulnerability
  • Affected Components (of application or N/W)
  • Vulnerability Impact, Severity, CVSS Score, and Potential Loss (in $)
  • Steps to Reproduce
  • Steps to fix / Suggested Fixes
  • Additional References

5. Use security audit tools for Blockchain and Smart Contracts

  • SWC-registry – It is a type of library for smart contract weakness and vulnerabilities
  • MythX – It is a smart contract security analysis API
  • Echidna – It is used for fuzzing/property-based testing of Ethereum smarts contracts
  • Manticore – It is a symbolic execution tool for smart contract analysis
  • Oyente – A static analysis tool for smart contract security
  • SmartCheck – Security analyzer
  • Octopus – It is a security analysis framework for the smart contract
  • Awesome Buggy ERC20 Tokens – A collection of vulnerabilities in ERC20 smart contracts with tokens affected

Professional Smart Contract Security Audit by Astra Security

smart contract security audit by Astra Security

Considering the more complex structure of blockchains and smart contracts can become ambiguous for many IT teams during the security audit or pentesting of their smart contracts. Further, the limited and distributed resources about the technology can get the IT teams stuck during the audit process due to insufficient knowledge for proper implementation – which ultimately leads to a waste of time and resources for your organization.

Hence, it is always best to take professional help for smart contracts audit from certified security auditors who can easily do the job for you so you focus on the business side.

Astra Security can help you get your smart contract or blockchain platform audit done without any hassle. The award-winning team at Astra Security provides the most complete set of smart contract security solutions and services. You also get a publicly verifiable VAPT certification from Astra that can help you build trust among customers for your blockchain-based platform.

smart contract security - VAPT certificated by Astra

With Astra Security, you achieve every goal of your comprehensive security strategy for your blockchain platform – be it best practices to reduce risks against cyberattacks or building a rock-solid application for your customers.

Want to know more about Astra’s smart contract security audit solution and services? Schedule a call here to talk with our expert team in detail.


References:
https://ethereum.org/en/developers/docs/security/
https://consensys.github.io/smart-contract-best-practices/known_attacks/
https://github.com/crytic/building-secure-contracts/blob/master/development-guidelines/guidelines.md

FAQs

1. What is the timeline for Smart Contract Security Audit?

Smart Contract Security testing takes 7-10 days to complete. The timeline may differ slightly based on the nature and scope of the test.

2. How much does a security audit cost?

The cost of a smart contract security audit depends on the scope of the audit, however, it is usually upwards of $7000. Also, learn about penetration testing costs.

3. Why choose Astra for Security Audit?

The security engineers at Astra perform extensive manual pentest on top of machine learning-driven automated scans. The vulnerability reports appear on your dashboard with detailed remediation guides. You will have access to a team of 2 to 10 security experts to help you with the fixes.

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Kanishk Tagade

Kanishk Tagade is a B2B SaaS marketer. He is also corporate contributor at many technology magazines. Editor-in-Chief at "QuickCyber.news", his work is published in more than 50+ news platforms. Also, he is a social micro-influencer for the latest cybersecurity, digital transformation, AI/ML and IoT products.
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Rebecca
Rebecca
1 month ago

Hey, thank you for the detailed post. I would like to know which are the best smart contract audit companies in the US?

Nivedita James
Editor
Nivedita James
1 month ago
Reply to  Rebecca

Hey Rebecca, here are some of the best smart contract audit companies in the US-
1. Astra’s Pentest Suite
2. Quantstamp
3. OpenZeppelin
4. Trail of Bits
5. ConsenSys Diligence

Psst! Hi there. We’re Astra.

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