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What do smart contract auditors look for while doing a smart contract audit

A smart contract is a code that ensures that the conditions of a transaction are followed by all parties involved. It's called a smart contract since it's self-executing and doesn't require the use of a middleman.

Smart contracts have made an impact on decentralized financial systems in such areas as digital exchange transactions, electoral voting, crowdfunding, supply chain management, and many more.
We want to take a look at what smart contract auditors look for during an audit.

The importance of a smart contract audit


Smart contracts are one of the most fascinating parts of technology adoption, but they come with their own set of challenges. To get the most out of these contracts, they must be properly developed and audited.

If left unchecked, issues within smart contracts serve as a backdoor to the project's intrinsic features, allowing hackers to take advantage of them. With DeFi's TVL now exceeding $80 billion, the necessity for a properly written and audited smart contract becomes even more critical, since the assets are basically locked in the smart contracts exclusively.
An audit determines if a contract has any problems.

So we can’t help but ask, how important is it to find flaws in a smart contract?
In recent years, we've seen how a single bug may result in millions of dollars in damages. The 2017 DAO Hack is a good illustration of this. While some have claimed that DAO's marketing was better than its implementation, worries about its code's susceptibility to assaults were growing. An attacker quickly drained almost 3.6 million ethers.


Don’t make the news for a wrong reason

Writing a completely protected smart contract is challenging, and an independent audit is required to build the groundwork for a serious project.

A smart contract, on the other hand, is very unlikely to be constructed without any potential flaws. Even if a smart contract is built well, there is no guarantee that it will be bug-free in the future. Those who believe that a smart contract is immutable and that new defects cannot occur should keep in mind that smart contracts are also dependent on other entities.

In the DeFi money market, for example, a smart contract is dependent on an oracle, and if the oracle is compromised, the smart contract may be attacked as well.
As a result, auditors will be your finest allies on your DeFi journey. They can perform a smart contract audit and verify its security.


What do smart contract auditors look for in a smart contract?


1: Initial Code Review and Familiarization


Simply put, auditors ask the development team for all documentation related to the smart contract's design and intended behavior. Auditors do a preliminary code examination to assess the contract's general consistency.

2. Code Analysis (Manual and Automatic)


While manual code analysis checks each line of the code to ensure that the smart contract's specification is followed to the letter, automated code analysis searches for problems that people might miss. This check verifies that basic standards such as code structure and design, redundant code avoidance, and anticipated behavior are followed.

3. Identifying Vulnerabilities That Have Been Found


Identifying security flaws is at the whole point of smart contract audits. Because there are so many frequent Ethereum smart contract security problems, auditors have developed a standard checklist to identify them, including:

Reentrancy - Reentrancy is the bug that caused the DOA to collapse. Users begin multiple transfers without transmitting any of them in this method. As a result, an attacker can initiate many withdrawals without actually submitting any of them.

Overflows and Underflows — Because computers don't grasp infinity, an attacker can cause the output to be greater than the maximum value in an overflow and smaller than the minimum value in an underflow.

Block Gas Limit - As a project grows in popularity and collects a big quantity of data, transactions start to burn a lot of gas. As a result, conducting a transaction is complicated, resulting in vulnerabilities.

4. Evaluation of Results


When the contract is run in the real world, the auditors examine to see if the contract can fulfill the agreement and if it can handle all of the probable changes.

5. Gas Optimization and Compliance


It's possible that the smart contract will break municipal or industry rules. Auditors check for regulatory compliance and, if necessary, make recommendations for improvements.

Gas prices are charged by the networks to cover transaction expenses. Auditors ensure that smart contract activities do not consume excessive amounts of gas or transaction fees.

6. Hands-on testing


Auditors check that all of the codes are operating as intended by deploying the contract on a local test network and conducting a complete test suite.

How can developers avoid any bugs before the contract is audited?


1. Create a Developmental Setting


Several development environment technologies, like Truffle, make it easy for developers to deploy contracts, create apps, and even conduct tests. You may also utilize these tools to speed up recurring operations and contract troubleshooting.

2. Use Static Analysis Software


A static analysis tool can help a developer find stylistic inconsistencies and code mistakes. Solidity Linters can assist in the study of both style and security guides. Two automated vulnerability detectors, for example, are Slither and Mythril.

3. Secure Development Recommendations


In addition to the aforementioned difficulties, security flaws can cause a slew of other issues. As a result, developers should get familiar with as many security flaws as possible.
There are other things that need to be considered. Among them are solidity patterns, such as behavior, security, and economic patterns.
External calls and pull over push, should be also carefully studied by developers.

4. Carry out tests


Contracts should run a complete test suite for a lengthy period of time before putting a big quantity of money on the line. It will assist in the early discovery of bugs as well as the detection of abnormal behavior.

Developers might do extensive studies in order to evaluate the contract on a wide scale.

Running tests, on the other hand, will not guarantee you a contract. Developers must also assess the efficacy of such experiments. Looking for a hosted CI environment is one approach to run unit tests on a regular basis and assess their efficacy.

5. Deployment On The Mainnet


Consider launching the contract on a public testnet before opting to put it on the mainnet. Developers, in particular, can choose to launch beta versions of the contract to the mainnet. In the beginning, it will limit the amount of danger.

Consider establishing a bug bounty program during the testnet phase, in which the developer community assists in finding major defects in exchange for monetary incentives.

6. Observation of Events


Another technique that can help to operational excellence is putting in place an adequate monitoring system. This monitoring system will alert the developers if the system undergoes any real-world modifications.

Conclusion

Before establishing a smart contract, every developer and any interested parties should understand the importance of following best security practices.

While creating an error-free smart contract remains a pipe dream, the ability to quickly respond to vulnerabilities is a reality.

A staff of professional auditors who keep up with the industry's ever-changing trends is required for a smart contract. To learn more about the need for a smart contract audit, contact our team of auditors for a free consultation.

Please do not hesitate to contact our specialists if you want any assistance with the smart contract audit!