In recent years, blockchain hackers have stolen millions of dollars from blockchain projects. Thanks to vulnerabilities in smart contracts. It’s not because hackers can penetrate the blockchain. That’s far from it. But the human-prone writing errors in smart contracts have given hackers freedom to steal. Considering how relatively new blockchain and smart contracts are and the spades of hacks in blockchain, thorough audits of smart contracts is what is essential at the moment and now crucial than ever.
Here are five reasons smart contract audit is vital for blockchain security.
Mitigate security risk
Smart contracts are immutable and secure. Yet, they are prone to vulnerabilities such as re-entrancy, access control, overflow, and underflow issues. What comes to mind here, among others, is the re-entrancy attack on DAO in 2016. The autonomous organisation lost $70m to the attack. These are some of the ways hackers exploit smart contracts within a twinkle of an eye. And drain a contract of every penny in it.
However, smart contract audit plays a significant role in preventing hacks, such as those mentioned above and securing the already dependable blockchain. With the help of an auditor, he identifies and avert vulnerabilities in smart contracts before it goes live.
Ensure contract functions work as intended
Smart contracts are a complex yet delicate set of codes. There’s a possibility of it behaving in a way you never intended thereby having a far-reaching effect. An auditor can save the day by looking at your documentation to know the intents behind your smart contract. Keeping good documentation is a smart move for your project. Also, it’s a beam of light that allows an auditor to understand the inner happenings in your smart contract. The auditor can verify if the code implements the intended logic and behavior. And test various use cases to ensure the smart contract works correctly.
Build user trust
The current rate at which hackers hack smart contract is mind-boggling. It’s a blow to users trust. Users start to think twice before putting their money into a blockchain project. No one loves to part ways with their money. And this isn’t good news for blockchain service providers. Smart contract audits increases user confidence in Web3 projects. They are willing to put their money in them because they know there money is safe.
Recently, a hacker got into Sentiment Protocol’s pool – a lending platform – and stole a staggering $1m worth of crypto. After negotiation between the parties, the hacker walked away with $100k. Auditing a smart contract prevents this type of case from happening. You identify vulnerabilities early. So you can reduce costly fixes and rewrites later on. Also, it helps fend off costly errors and mistakes that can cause security breaches.
Naturally, people don’t want to associate with someone having a bad reputation. Hacks upon hacks of smart contract dents the image of a blockchain protocol. People won’t want to have anything to do with a protocol susceptible to attacks. Now, think of this. What if your blockchain services never got hacked for once? It’s an achievement that can drive tens of thousands of people to use your product and services.
Achieving this level of success may not be possible without going through an audit of your smart contract. An audit demonstrates, to an extent, how secure your contract is. By that, auditors can avert contract failures and breaches capable of damaging your company’s reputation.
In conclusion, a smart contract audit ensures blockchain security and all products and services built upon it. Removing audits from smart contracts renders it much more vulnerable to attacks. And the more hacks are constant, the more the financial losses, reputational damage, and other detrimental results.