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Did you know a Tiny Bug once costed a DeFi Lending platform nearly $197 million?
Yes, you read that right. A single loophole in the smart contract code wiped out around $197 million from Euler Finance, one of the emerging platforms in the DeFi space. All it took was a loophole in the “donateToreserves” function, and a hacker smart enough to use it to their advantage. Aside from the loss of funds, the users and basic trust of the platform were shaken.
This is exactly why Smart Contract Audits are a must-have in your blockchain-based businesses. In fact, many major exploits in space could have been prevented or mitigated with timely audits. So, whether you’re a curious newbie exploring smart contracts or a business ready to safeguard your protocol, consider this blog as a sign to get your smart contract audited.
Let’s start with a little reminder of….
Smart Contract Audit – A Quick Glance
A Smart Contract Audit is the process of analyzing and reviewing the contracts to identify bugs, breaches, or security loopholes and resolving the problems. Smart contract auditing is necessary to ensure the security and reliability of blockchain-based applications. This involves manual code review, automated testing tools, and a formal verification checklist to ensure the performance.
With this quick glance, let’s explore the potential risks that skipping or delaying your smart contract audit may bring to the table.
What Are The Potential Risks Of Not Auditing a Smart Contract On Time?
Regulatory Challenges
Legal regulations are constantly evolving, especially in jurisdictions like the U.S., EU, and Asia. Failing to audit your smart contracts might result in serious legal hurdles. Any breach or malfunction could lead to heavy penalties, delistings, or, in worst cases, complete shutdown.
Investor’s Trust Issues
A well-audited protocol eliminates the unwarranted risks. Once investor confidence slips, it’s hard to get it back. This might even shake up your community, making it difficult to raise funds, attract partnerships, or even retain your community.
Permanent Financial Loss
The immutable nature of smart contracts means there’s no return button. Errors caused by a logic flaw or an unchecked condition are irreversible. So, if the funds are lost, then they are gone for good.
Emergency Re-fixes
When vulnerabilities are discovered, they demand time, resources, and significant capital for fixing. In some cases, contracts may even need to be redeployed, causing project delays and credibility loss in the eyes of your users.
Technical Errors
- Reentrancy Exploits – A malicious contract repeatedly calls back into the original contract before its previous execution is complete. In worst cases, the funds may be drained due to the repetitive loops.
- DoS Attacks – If a smart contract isn’t built to handle irregular inputs or unexpected calls, it becomes vulnerable to Denial of Service (DoS) attacks. These attacks can freeze essential functions of the platform.
- Integer Overflow/Underflow – This happens when numerical values exceed their limits, resulting in incorrect calculations. Apart from financial perspectives, this can lead to manipulating token supplies.
- Unchecked External Calls – Using third-party contracts or external oracles without proper precautions might lead to unexpected malicious execution.
- Timestamp Dependence – A Timely glitch on block timestamps can dramatically alter the outcome of time-sensitive functions.
When the risks of skipping an audit are this high, it naturally raises the next question,
Why is Smart Contract Audit Essential For Your Blockchain Business?
Prevents Costly Errors
Taking up a smart contract audit service might help you identify minor and critical vulnerabilities at an earlier stage. Addressing these bugs can save your projects from legal, financial, or reputational damages you may face in the future.
Experts Review
Professional Smart Contract Audit Firms like Pixel Web Solutions employ skilled blockchain security experts. The experts are capable of bringing up a fresh, third-party perspective. Hiring audit experts allows you to see beyond generic assumptions, enhancing the overall performance.
Boost Code Performance
Apart from spotting vulnerabilities, the best smart contract auditors can suggest up optimizations to improve the operational flow. This enhances user experience, streamlines contract logic, and reduces unexpected execution costs over time.
Maintains Business Logic
Audits verify not only the security of your contract but also review the accuracy of your business model. The auditors can ensure that your code perfectly aligns with your intended business goals and expectations. Misalignment can cause functional breakdowns.
Certified Audit Report
Most top smart contract audit companies can issue the audit report publicly. This is an official document that will outline the discovered issues, fixes applied, and risk levels assessed. A transparent report like this will help improve the trust and confidence of the platform.
Increases User Adoption & Confidence
Security is a non-negotiable factor in any business. When users know your contract code has passed a professional audit, they are more likely to interact and invest in your platform. A transparent audit can transform a curious visitor into a loyal user.
Now that we understand the importance of Smart contract Audit Service in a business, let’s explore the businesses that can benefit from these services.
Which types of businesses require Smart Contract Auditing Service?
- Crypto exchange
- NFT Marketplace
- Gaming and Gambling
- Dapps
- DAO
- DeFi Platforms
- Crypto Lending Platforms
- Crypto Crowdfunding Platforms
- Insurance and Prediction Platforms
- Other Blockchain-based applications
As the need for reliable smart contract audits grows, Pixel Web Solutions stands out as a trusted name in the space. We offer a structured and in-depth smart contract auditing service customized to individual preferences. Here’s a step-by-step process of how we navigate through our smart contract audit service.
How Can We Help You Through Our Smart Contract Audit Service?
Pixel follows up on a well-structured and pre-planned smart contract audit service, designed to secure your blockchain project from the ground up. Each phase of our audit workflow is planned properly to identify, resolve, and prevent vulnerabilities.
Initial Consultation
We begin our smart contract auditing process by understanding your project’s basic scope. Our technical audit team engages with you to understand the logic and functionalities of the smart contract. We here filter out potential risk areas earlier and tailor the audit strategy to your specific architecture.
Manual and Automated Analysis
Our smart contract auditors follow up on a hybrid model of both manual and automated smart contract audit approaches. Our expert auditors carefully review every line of code for logic flaws and vulnerabilities. Alongside this, we deploy industry-leading automated tools to scan the codebase. This dual-layered inspection ensures complete coverage, catching what machines might miss and validating human-found errors.
Risk Classification & Mapping
Once potential issues are identified, we categorize them based on severity, ranging from critical to low-impact issues. Thus, we can prioritize issues that need fixes immediately or later based on the potential risks and impact they hold. Also, we can map out the threat range of each flaw in terms of smart contract performance, fund security, and regulatory drawbacks.
Preliminary Audit Report
Based on the mapped details, we deliver an initial audit report, mentioning all the discovered vulnerabilities, categorized by risk level. This pre-smart contract audit report will also list out the respective mitigation strategies and technical descriptions in detail.
Vulnerability Resolution
With the drafted report, our team will be involved in fixing the noted vulnerabilities. Be it logic flaws, security gaps, or performance inefficiencies, every issue is thoroughly addressed without compromising the business intent. We ensure that the contract is not only secure but also optimized for performance.
Re-audit & Validation
Once all fixes have been implemented, we once again conduct a comprehensive re-audit to verify the effectiveness of each patch. This phase re-evaluates the updated codebase to ensure no new bugs were introduced and that previously reported vulnerabilities have been properly addressed or eliminated.
Certified Final Audit Report
Upon successful validation, we issue a Certified Final Audit Report. This includes an executive summary, detailed vulnerability log, fix status, and our professional attestation of code security. This can serve as a mark of assurance for investors, users, and business owners.
Pulling out a smart contract audit service is a smart move, but doing it at the right time can make all the difference. Let’s look at when you should consider auditing your blockchain smart contract.
When should you audit your Blockchain Smart Contract?
Pre-Deployment
Usually, if a smart contract is deployed on the chain, it becomes unalterable. So, auditing your smart contract code before deploying it lets you find errors and security vulnerabilities earlier. Also, you can save money by avoiding post-launch fixes.
Post-Deployment
Even after the pre-deployment audits, it is advised to verify once again in the live environment.
This smart contract audit, after launch, will let you confirm if there are any unexpected behaviours due to external protocol interaction. You need to track the performance of the code in large ecosystems or under various real-world circumstances.
Before Core Upgrades
If you’re planning to upgrade your contract or bring up any new protocol changes, then auditing before going live is significant. In rare cases, even a minor feature update can bring in unexpected vulnerabilities, affecting the existing system. Remember, every new deployment or update deserves the same level of checks.
After a Security Exploit
If your platform’s blockchain or any other codependent factors face a hack or any security breaches, then a complete security scan is a must. This will let you understand and eliminate the exact root cause. You can also take up necessary measures to avoid the same circumstances in the future.
Periodically for Long-Term Projects
If the project is supposed to be posed for a long-term objective, then periodic smart contract audits are the way to go. Plan this either for a quarter or annually. Taking up this smart contract auditing service will help monitor changes, keep up with industry trends, and all while maintaining community trust.
How much does a Smart Contract Audit Cost?
On average, the cost of a smart contract audit service typically ranges between $2000 and $10,000 or more, based on the intricacies and complexity involved. These estimates are often suitable for standard audits that follow well-established patterns and require limited analysis.
However, when it comes to more advanced smart contracts, the cost can escalate significantly, depending on the depth of auditing and level of assurance required. While these audits may seem costly, they’re an important investment. Especially considering that a single setback in a smart contract can result in huge financial losses. Here are some of the factors that also have a strong say in the cost.
- Team Size and Expertise Involved
- Audit Report Depth and Transparency
- Jurisdictional Compliance and Regulatory Checks
- Integration with External Protocols
- Blockchain Platform
- Smart Contract Audit Company’s Reputation
- Project Complexity Involved
How long does it take to complete a smart contract audit?
A smart contract audit company with the right expertise and perfectly planned tools can take anywhere from 1 to 5 weeks or more. Some smaller contracts may be audited in just a few days. But, for more complex projects, especially those involving intricate logic, integrations, or custom token standards, it will naturally take longer. Several key factors impact the duration of a Smart contract security audit.
Some of the key factors are,
- The more code, the longer it takes to review the smart contract code. Complex platforms like DeFi lending/borrowing, staking, or other unique applications have a high smart contract involvement, so it takes more time to analyze.
- Innovative features or unique functionalities might need extra scrutiny since they can’t rely on existing audit checklists. Interim
- Fixes aren’t always easy, and one-timers. Based on the bug type, the duration required to fix it might change.
- Depending on the smart contract audit type, the time duration can also fluctuate. In cases of manual audit, it requires auditors to test line by line, taking up several weeks. Furthermore, in case of an automated audit, specialized tools are used to scan for bugs and vulnerabilities, making the process faster.
- Some patches need re-audits occasionally, or even complete re-evaluation based on the vulnerability found.
Let’s make your Smart Contract Audits Pixel Perfect!
So, this blog might have made you understand the intricacies of adopting blockchain audit services. From identifying critical vulnerabilities to enhancing performance and trust, every step of the audit process plays a crucial role. But choosing the right smart contract audit firm, like Pixel Web Solutions, plays a crucial role. With a sharp eye for detail, in-house audit specialists, and a well-drafted process, we will fortify your assets. With over a decade of industry experience, we’ve been one of the top Smart contract Audit Companies for businesses. Whether you’re heading toward a launch, investor round, or protocol upgrade, having Pixel as your security contract audit partner makes all the difference.
FAQ (Frequently Asked Questions)
What type of vulnerabilities can a smart contract audit find?
A Smart Contract audit is designed to identify various vulnerabilities. They are capable of identifying reentrancy attacks, access control issues, time stamp dependencies, and other potential vulnerabilities.
What does Pixel’s Smart Contract Audit Report consist of?
Our Smart Contract Audit Report includes a detailed vulnerability assessment, the severity of the identified bugs, recommendations for fixes, and a post-remediation review. Also, contains the findings from bugs and the code’s inner logic and working efficiency.
What happens if vulnerable issues are found?
If vulnerabilities are found during the audit, the issues are well documented with severity levels, along with detailed explanations and suggested fixes. The audit team will then go on with resolving these issues, ensuring all the vulnerabilities are addressed securely.
Disclaimer:
The cost and time estimation mentioned in this article are purely for informational purposes only and should not be considered as a final quote. The actual cost and time duration of Smart Contract Audit services may vary based on project requirements and specific business needs. Pixel Web Solutions is not responsible for any discrepancies, financial decisions, or outcomes based on the estimation mentioned here. For more accurate information, we highly recommend contacting our business team.