The Ultimate Smart Contract Audit Checklist

Calibraint

Author

September 9, 2024

Smart contracts are the backbone of many blockchain applications, ensuring that transactions run smoothly without a middleman. However, they can be vulnerable to errors or hacks, which is where audits come in. This guide will walk you through everything you need to know to secure smart contracts. 

Audits help with developing smart contracts that are more secure, efficient, and reliable. They’re essential to protect digital assets and maintain trust within the blockchain community. In this post, we’ll break down the key components of a smart contract audit checklist in a simple and engaging way.

What is a Smart Contract Audit?

A smart contract audit checklist is a thorough review of a blockchain-based contract’s code to find and fix any bugs, vulnerabilities, or issues that could lead to problems later on. Think of it like proofreading an important essay before submitting it but for code!

These audits play a crucial role in blockchain security. By checking the contract for weaknesses, they help prevent hackers from exploiting mistakes in the code, which can lead to significant financial losses. Usually, audits are done before launching a project to ensure everything works correctly, but they can happen throughout a project’s lifecycle for continuous improvement.

Why are Smart Contract Audits Necessary?

Skipping a smart contract audit checklist can be disastrous. Imagine if a video game had a bug that allowed players to cheat—well, in blockchain, those “cheats” can mean millions of dollars lost.  

Not auditing smart contracts opens the door to attacks like hacks or exploits.

There have been many cases in which similar incidents have been reported. For example, in 2016, the DAO lost $60 million due to a bug in its smart contract. Audits are essential for preventing such catastrophes and also boosting investor confidence. When contracts are secure, investors and users can trust that their funds are safe.

Who Performs Smart Contract Audits?

Smart contract audits are typically done by specialized firms or blockchain security experts. Some of the well-known audit firms in the industry include CertiK, Quantstamp, and OpenZeppelin.

While large teams may rely on external auditors, smaller teams sometimes conduct their own audits, though independent audits are generally more trusted. Independent experts bring a fresh pair of eyes to the table, which can often catch things the original developers might miss. 

Things you Need to Check during Smart Contract Audits  

Pre-Audit Preparation

Before you begin the actual audit, there are several steps to follow. First, make sure your code is well-documented. Just like when you’re explaining a complex math problem, clear comments help auditors understand the logic behind the code. It’s also crucial to set up test environments where the code can be safely tested without risking real assets.

Some other key factors to consider:

• Ensure your smart contracts are structured logically.
• Use proper version control, so every change is tracked.
• Test your code on different environments to catch any hidden bugs. 

Code Review & Security Vulnerabilities

Code reviews can be done in two main ways: manually or with automated tools. Manual reviews involve auditors carefully reading through the code, while automated tools scan for known vulnerabilities. Both methods are often used together to ensure maximum security.

Common vulnerabilities to watch out for include:

• Reentrancy attacks: This happens when a contract is tricked into running multiple transactions at once, causing unexpected results.
• Integer overflows/underflows: These occur when a number in the contract becomes too large or too small for the system to handle.
• Front-running: In this case, someone manipulates the order of transactions to their advantage.
• Denial of Service attacks: These attacks prevent the contract from executing transactions.

A key part of auditing is ensuring that the logic of the code is consistent and doesn’t have unexpected behavior.

Gas Optimization

In the blockchain world, “gas” refers to the fees required to perform a transaction. Efficient smart contracts use less gas, which means lower costs for users. Gas optimization ensures that the contract runs efficiently without wasting computational resources.

Tools like Solhint and MythX can help developers check and improve gas usage. Optimizing gas costs is especially important for contracts that will be used frequently.

Functionality & Edge Case Testing

One of the most critical steps is making sure the smart contract behaves exactly as intended. This means testing it under all possible scenarios, including unusual or “edge” cases like unexpected inputs or extreme conditions.

Unit testing helps check small parts of the code, while integration testing checks how different parts work together. Thorough testing ensures that the real-world applications of smart contracts are handled without any hiccups.

Checking External Dependencies

Smart contracts sometimes rely on external services, like oracles or other contracts. Auditors need to verify that these dependencies are trustworthy and well-audited.

If a smart contract uses third-party code, make sure it’s from a reputable source. Using untrusted or poorly audited code from other projects can introduce hidden vulnerabilities.

Testnet Deployment & Simulation

Before deploying your contract to the live blockchain (called the “mainnet”), it’s crucial to test it on a testnet. These test networks mimic the real blockchain environment but without the risks of handling real assets.

Running simulations helps check how the contract behaves under actual conditions. It’s like testing a spaceship in a simulator before launching it into space!

Post-Audit Best Practices

Audit Report & Documentation

Once the audit is complete, you’ll receive a comprehensive audit report. This report highlights any vulnerabilities found, offers recommendations, and rates the severity of the risks. It’s essential to carefully document all changes made based on the audit’s findings.

Fixing Vulnerabilities & Re-Auditing

After addressing any vulnerabilities, a re-audit ensures that the fixes didn’t introduce new issues. Keeping an ongoing audit process throughout development is key, especially as the contract evolves.

Formal Verification

Formal verification is like the ultimate proof that a smart contract is mathematically correct. It checks if the code behaves exactly as intended, leaving no room for errors. Tools like KEVM can be used for this process. While not always necessary, formal verification is recommended for highly sensitive contracts.

Additional Considerations for Smart Contract Audits

Continuous Monitoring & On-Chain Auditing

Smart contract security doesn’t stop after the audit. Continuous monitoring and on-chain auditing tools like ChainSecurity help track the contract’s behavior in real time. This ensures that any issues can be caught before they cause serious problems.

Third-Party Code Audits vs. Internal Audits

Both internal and third-party audits have their pros and cons. Internal teams know the code better, but external auditors bring an unbiased perspective. Combining both methods can offer the best security coverage, and being transparent about the audit process boosts trust within the community.

Conclusion 

Securing a smart contract with a thorough audit is essential to its success. This Ultimate Checklist For Smart Contract Audits ensures that developers can prevent vulnerabilities, reduce risks, and build trust with their users and investors. 

So, if you are into smart contract auditing, following this guide can save you from costly mistakes down the line.

Calibraint

Author

September 9, 2024