The Ethereum blockchain launched in 2015 to massive fanfare along with its native token, ETH. Ethereum is currently the most popular blockchain for building smart contracts. This chain powers everything from decentralized exchanges to tokenized games, social platforms, and more.
It is necessary to audit an intelligent contract before deploying it live on the Ethereum blockchain. This article will explain how to go about that.
What is a smart contract audit?
It is an extensive review of a contract to identify security risks that malicious actors could exploit. It also identifies structural inefficiencies preventing the blockchain protocol from achieving its goals and ensures compliance with industry standards.
Ethereum-based contracts move billions of dollars worth of digital assets daily, making them a prime target for hackers. Audits ensure that these contracts are free from vulnerabilities that hackers could exploit to steal funds.
Why does my project need an audit?
Audits involve experts analyzing your project’s code to detect security flaws and other vulnerabilities. Without an audit, you might deploy a project with various security errors waiting to be exploited.
Having no formal audit means you’ll struggle to attract users to your product. With the number of hacks in the blockchain sector, users generally demand an audit before committing to using a product. Besides, audits are also required if you want to raise funds for your project from external investors.
How does an audit work?
An Ethereum smart contract audit is a comprehensive process with many steps, including:
Documentation
The process starts with the project owner preparing technical documentation for the auditor. The auditor needs to understand the project: what it’s about, its goals, and its challenges. Technical documentation makes it easy for the auditor to study and understand the inner workings of the contract they’re about to review.
The technical documentation includes the whitepapers, codebase comments, and any relevant information that helps the auditing team understand the system.
Code review
The auditing team closely examines the codebase to understand the concept and design. How is the protocol intended to function? What tools and libraries were used to write the code? What tests were performed on the codebase? These are the types of questions the auditors seek to answer.
Analysis
At this stage, the auditing team begins analyzing the code to identify security flaws, design inefficiencies, and any other errors that could hinder the system. An ideal team includes at least two blockchain technology and security experts to review the project.
The analysis combines both automated tools and manual review. Automated analysis tools can easily identify common security flaws. The manual review identifies complex flaws that automated tools can’t easily find.
Initial report
The auditor prepares an initial report detailing any flaws they identified and suggestions to fix them. This report is sent to the client for review.
Code fixes and updates
The project developer studies the initial report they received and implements the recommendations on their codebase.
Final report
After implementing the fixes, the protocol developer reverts to the auditor for confirmation. Once the auditor confirms that the fixes have been implemented, it prepares a final report certifying the project. This report is usually posted publicly to assure users that they interact with an independently audited project.
Conclusion
A formal audit is necessary for every Ethereum-based smart contract. We have explained how it works in a way that’s easy to understand.
