Smart Contract: Auditing 101

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They are the backbone of many blockchain applications, including DeFi (Decentralized Finance). However, these contracts, if not properly audited, can lead to vulnerabilities, resulting in significant financial losses. This article will guide you through the basics of smart contract auditing, with references to the "Smart Contract Security Verification Standard (SCSVS)" and "Solidity Patterns."

Why Audit Smart Contracts?

Smart contracts handle transactions and manipulate sensitive data, including financial assets. They operate in an environment where bugs or vulnerabilities can result in losses running into millions of dollars. Auditing aims to identify these vulnerabilities before they are exploited.

The Smart Contract Security Verification Standard (SCSVS)

SCSVS is a free 14-part checklist created to standardize the security of smart contracts. The checklist helps to identify the majority of known security problems and vulnerabilities, providing guidance at every stage of the smart contract's lifecycle - from design to implementation.

The list can be used as a starting point for formal threat modeling, a measure of your smart contract security, a scoping document for penetration tests or security audits, and more.

The key areas covered in this standard include:

Architecture, Design, and Threat Modelling
Access Control
Blockchain Data
Communications
Arithmetic
Malicious Input Handling
Gas Usage & Limitations
Business Logic, and more

In assessing the severity of risks, it's recommended to use the Common Vulnerability Scoring System (CVSS), a free and open industry standard for assessing the severity of security vulnerabilities.

Solidity Patterns

When writing smart contracts in Solidity, it's important to follow best practices and design patterns. These patterns can help ensure security, optimize gas consumption, and increase the maintainability of your code.

Some of these patterns include:

Guard Check: Ensure the behavior of a smart contract and its input parameters are as expected.
State Machine: Enable a contract to go through different stages with different corresponding functionality exposed.
Access Restriction: Restrict the access to contract functionality according to suitable criteria.
Checks Effects Interactions: Reduce the attack surface for malicious contracts trying to hijack control flow after an external call.
Emergency Stop: Add an option to disable critical contract functionality in case of an emergency, and many more.

Smart Contract Weakness Classification (SWC)

The SWC Registry provides a detailed overview of known smart contract vulnerabilities. Each vulnerability is identified by an SWC identifier, a title, and a list of related code samples. Some examples include Unencrypted Private Data On-Chain (SWC-136), Message call with hardcoded gas amount (SWC-134), and DoS With Block Gas Limit (SWC-128).

While the SWC Registry isn't actively maintained, it provides a good starting point for understanding the types of vulnerabilities that can occur in smart contracts.

Conclusion

Auditing is an essential part of the smart contract development process. By using resources like the SCSVS, Solidity Patterns, and the SWC, developers, architects, and security reviewers can ensure that their smart contracts are secure, reliable, and efficient. Remember, the ultimate goal is to develop high-quality code that helps mitigate known vulnerabilities by design.

According to a report by Chainlink, Swift, Chainlink, and 12+ banks have successfully transferred tokenized assets cross-chain, demonstrating the importance of secure smart contracts across blockchains. Over $5 billion has been lost to hacks in DeFi to date, underscoring why comprehensive audits are critical before deployment.

During the audit process, auditors will review the code, logic, architecture, and security measures to identify any potential issues using both automated and manual processes. They specifically look for vulnerable areas that could be exploited as well as opportunities for improvement.

According to Patrick Collins, co-founder of Cyfrin, and security researcher Tincho, professional audits involve extensive manual reviews, integration testing, fuzzing, and more. Their $100,000 bug bounty payout demonstrates the importance of expert audits. Collins also provides a tutorial on strategies for finding contract vulnerabilities.

Overall, by leveraging resources like the SCSVS, Solidity Patterns, and SWC, and seeking professional audits, developers can release highly secure, efficient smart contracts that protect user funds across blockchains.