Smart Contracts are programs stored on the blockchain that automatically run and execute based on predetermined conditions. They are usually used to automate the execution of any agreement so that all the participants can get a certain outcome.

Smart contract auditing is the throughput analysis of the contract's codes and functions to identify security issues and vulnerabilities. Auditing is a really important process to ensure the security and reliability of any decentralized application.

Once the smart contract is deployed, there is no room for changes. If any error is found then the smart contract is redeployed.

It is of real importance as it can save millions of dollars from hacking. According to a recent report by BanklessTimes.com, the total amount of money that is lost due to smart contract vulnerabilities is $2.7 billion which increased by 1250% from 2020. In the first quarter of 2022, DeFi Industry lost over $1.6B due to the exploits of smart contract vulnerabilities.

Hence, it is really important to do smart contract auditing to save the hacking of any decentralized application.

There are different steps which are involved in auditing a smart contract.

The project which is going to be audited must freeze during the time of auditing. The auditors must be provided with all the necessary documentation required for auditing. This includes codebase, whitepapers, architecture etc.

Automated testing is also called formal verification engine testing. This testing checks all the possible states of smart contracts and alerts around the issues which might be problematic.

After automated testing, a team of security experts examines each line of the code base and manually detects any error. While automated testing might help detect bugs, manual testing might help locate logical and architectural issues.

After finding the errors, these errors are then classified into different categories based on their seriousness. They can be classified into Critical, Major, Medium, Minor, and Informational based on their seriousness.

Critical issues might impact majorly in the functionality of protocol while informational issues may be related to the style and the best practices of writing the code.

After this test, auditors draft an initial report that summarises the code flaws and other issues. They also add their feedback on the projects and measures in improvising the code. The report is given to the project team which project team improves the code.

In the end, a final report is published in which auditors include all the findings in a detailed manner. With all the issues that have been marked and/or resolved the report is given to the application team and is often made available to the public to ensure full transparency.

1. Slither – Slither is a static smart contract analyzer which is developed by Trail of BLits. It was first published in 2018.

2. Remix IDE static analysis plug-in – It is a Remix IDE plugin which checks the contract code for security vulnerabilities and security issues.

3. Manticore – It is a symbolic execution tool that is used to analyze the contract. It is open source which means you can access it as code from GitHub.

4. sFuzz – It is a really simple black box testing suite called Simple Fuzzer. It can adapt according to the solidity smart contract. It is also an open-source tester.

5. Oyente – Oyente is another open-source smart contract analysis tool developed by Loi Luu and his team in Singapore in 2016.

In the end, we can say that performing contract auditing can save lots of financial assets from hacking and make the world more transparent. This is an essential step in building a decentralized application.

This article is published under Articulate Content Management Service.