What Is A Smart Contract Audit? A Comprehensive Guide - Did you know that the global smart contracts market size is estimated to reach USD 770.52 million by 2028 from USD 144.95 million in 2020?... To know in detail you can get in touch with Blocktech Brew, a Smart Contract Development Company. Adopt an Automated and Transparent Way of Executing Your Business Processes.

1. A Smart
Contract Audit?
A Comprehensive Guide
What Is
Created By Blocktech Brew

2. Did you know that the global smart contracts market size is estimated to reach USD
770.52 million by 2028 from USD 144.95 million in 2020?
Since all transactions on the blockchain are final, if any funds get stolen, these cannot
be retrieved. So, before you invest in a blockchain project, make sure that you’ve
thoroughly gone through the results of a smart contract audit or code review.
Besides, knowing the ins and outs of how these audits take place is equally vital. So,
take a look at the tools and methods used to arrive at the results. This will help you
make a more informed decision.
Introduction

3. Types of Smart Contracts
These are essentially self-executing contracts between two or more parties for an
exchange of something valuable when certain conditions are met without the
involvement of any third party.
The best part? They can be programmed to execute almost instantaneously on the
blockchain. This makes smart contracts ideal for transactions that need to be
conducted within a stipulated time.
Smart Contracts are classified into four types as per their usage by programmers
for building apps:

4. Decentralized Autonomous Organizations
Smart Legal Contracts
Distributed Applications
Contracts of Applied Logics
Here, the set of rules are established and controlled by the organization members and
not external entities.
Also known as legally-enforceable smart contracts, these have to adhere to strict
legal standards.
These consist of one or more local or remote clients that communicate with one or
more servers on several machines linked via a network.
These are built on a decentralized network that combines the smart contract with the
front-end user interface.

5. Need for a Smart Contract Audit
As blockchain transactions are irreversible, ensuring that a project’s code is secure is
essential.
Huge amounts of value are transacted through or locked in smart contracts. Thus,
these entice the hackers to carry out malicious attacks. Even a minor coding error
can lead to a loss of huge sums of money. For instance, more than 60 million dollars
worth of ETH were stolen as a result of the DAO hack. This led to a hard fork of the
Ethereum network.

6. So, if you’re thinking of investing in crypto over the blockchain, the importance of
audits for cybersecurity is paramount.

7. How are smart contracts audited?
Though every auditor’s approach may vary, the typical smart contract audit process
is as follows:
Determining the Audit’s Scope
Code Freeze
Testing

8. Determining the Audit’s Scope
Project specifications help the audit team keep the big picture in mind – the purpose
behind writing and using the code. The project’s architecture, build process, and
design choices are all parts of these specifications.
Then, the other associated documentation (generally included in the project’s
README file) should also be laid out.
To know about particular sections of code, auditors go through whitepapers and
docstrings. But to get a 360-degree view during the smart contract audit, these
professionals need to go through a well-written specification. It serves as the
backbone for the audit process.

9. Code Freeze
Simply put, it means that the smart contract code built on the blockchain has been
finalized and is ready to be deployed to the production environment. It is the final
draft stage wherein the developers have ensured that any abnormal or undesirable
code has been fixed.
A final commit hash is included in the specifications and provided to the audit team.
This ensures that the blockchain project team and the smart contract audit team
agree on the code being audited. It also guarantees that any modifications made to
the project are not in scope for the smart contract security audit.

10. Testing
Auditors carry out both manual and automated tests. However, the exact nature of
these tests changes depending on the auditing team’s expertise, their methods, and
their analysis tools.
The scope of these tests range from unit tests addressing specific functions to
integration tests targeting larger chunks of smart contract code.

11. Benefits of Smart Contract Code Testing
Higher the test coverage, lesser the chances of easily detectable bugs making
their way into an audit.
Further, tests also ensure that all developers within a team have agreed upon the
project’s functionalities and intended performance. This, in turn, prevents
confusion during the smart contract audit.
The tests also demonstrate another way to the auditors to get an insight into the
project’s expected functionality. If all tests pass, then all is well. If a number of
tests fail, the audit team reports the same to the project team. Accordingly, the
developers remake critical portions of the codebase.

12. How much does a smart contract audit cost?
Typically, such an audit runs into thousands of dollars. A particularly large project may
easily cost over $10,000. Note that the experience, expertise, and reputation of the
team carrying out the audit also determines the amount that needs to be paid.
Another factor is the number of smart contracts that need to be checked over the
blockchain.

13. How long does it take to audit a smart contract?
On average, the process takes between 2 and 14 days. The duration depends on
factors like complexity of the project, urgency, and smart contract size.
In case of large projects or protocols, the smart contract audit may take around 30
days.
To know in details you can get in touch with Blocktech Brew, a Smart Contract
Development Company. Adopt an Automated and Transparent Way of Executing
Your Business Processes.

14. How are smart contracts verified?
Without verifying the smart contract, the block explorer will not be able to allow you
to interact with the contract from their UI.
There are two ways to verify a smart contract:
Flatten all contracts into one single file and then verify using that file.
Standard JSON input method: for this, you need to install Hardhat.

15. Smart Contract Secure Coding Best Practices
Generate architectural diagrams and schema using Slither printers.
Keep as much code off-chain as you can.
Conduct thorough code documentation using Natspec format (for Solidity).
Document the procedures of upgrading or migration before the deployment.
Write small and meaningful functions – split the logic either through multiple contracts or by
grouping similar functions.
Clearly describe what the smart contracts do in plain English.
Keep a record of the logging of all events and operations.
Use reliable libraries.
Use a dependency manager instead of copying and pasting.
Use the recommended version of the programming language compiler.
Write detailed unit tests.
Secure the wallets of your privileged users using cryptography.
Keep monitoring your smart contracts after deployment.
Create an incident response plan as these can be hacked.

16. Thank You
Created By Blocktech Brew
Contact:
Email - business@blocktechbrew.com
Website - https://blocktechbrew.com/smart-contract