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What You Know About Smart Contract Security Audit?

Blockchain Technology has come up with revolution in the financial sector. But hacking in blockchain application has put the setback on the growth of blockchain. Keep in mind, Blockchain networks are secured but the applications which are running on that network are not too much secured. And these applications use smart contracts but they have security issues, so that is why there is a need of Smart Contract Security Audit. In this blog, you will read the Smart Contract Security Audit.

What are Smart Contracts?

Smart contracts are the computerized transaction protocols which are executing automatically according to the terms of the contract, without the involvement of intermediaries. These applications include services like borrowing, lending, trading and investment. These contracts are between two people in form of computer code and are processed on blockchain network. But these smart contracts has security vulnerabilities, so smart contract audit is essential to make sure that these smart contracts do not have any security issues.

What is Smart Contract Audit?

The smart contract audit is the analysis of the smart contract code which is used for identifying the issues in the smart contract. With this audit, the vulnerabilities and bugs can be identified in smart contracts. Normally, the third-party, professionals and smart contract auditors carry out smart contract audits for the thorough review of the code. It is very essential to review the code before deployment of smart contract. Because, if you write the smart contract to the blockchain, then you cannot change the code. If you do not do the audit before deployment of smart contracts, then it will result in result in various risks like loss of personal data or data theft.

The Smart Contract Audits are important for the better optimization of the code, for improving the performance of smart contracts, for enhancing the security of wallets and it also provide security against hacking attacks. These Audits are helpful for decentralized apps, for the people who gain the trust of investors, stakeholders and contributors, and also for the Smart contract developers.

Basic Structure of Smart Contracts Audit:

First, you should focus on the structure of your smart contract audits such as issues like reentrance mistakes, compilation errors, security issues and also the stack issues. The auditors also focus on the break testing in smart contract. There are two types of auditing processes in smart contracts i.e. manual code review and automatic code analysis. The manual code review in smart contracts focus on the every line of code in order to identify the compilation, security and also reentrancy issues. Whereas, automatic code analysis for smart contract auditing gives you the benefit of time-saving and faster identification of vulnerabilities.

How Smart Contracts Audits Works?

  1. Agreement on Specifications: The smart contract specification gives the clear explanation of the architecture, build process and also the design choices of a project. But due to the lack of specification, it leaves auditors without any idea of the actual working of the code. Hence, smart contract audit begin with a full specification of the project. In this auditors looks the time of ‘code freeze,’ where they can identify the undesirable factors in the code. Here, the developers will give the surety that changes beyond ‘code freeze’ point will not come under audit.
  2. Testing Process: Testing increases the smart contract audit cost. It is the simple process of bug detection. Auditors can perform unit tests for testing the individual functions and the integration tests which test the larger code. Improved testing will reduce the count of bugs and improves the performance of a smart contract project.
    If code passes the majority of tests, then there are less issues but, if the code fails in the tests then the auditors will consult with the developers and ask them about the failed tests. If there are so many failed tests then you should hold the audit process and do modifications in the codebase before moving forward. For higher quality, professionals look at 100% line coverage but 85% to 90% of line coverage for contract works perfect.
  3. Automated Analysis: Today, there is a need for automatic bug detection software is rapidly increasingly. Automated analysis tools in smart contract auditing help in identifying the general issues in code and also provide freedom from depending on human auditors. With this, auditors can analyze the new and complex vulnerabilities. This tool will take time to achieve the perfection for smart contract audits. Due to automatic analysis, the report can be false positives which show incorrect existence of issues. In this situation, you will go towards the manual analysis for identifying issues.
  4. Manual Analysis: Automatic tool cannot analyze the intention of smart contract developers. So, manual inspection is important for improving the detection of code vulnerabilities.
  5. Audit Report: Finally, auditors have to create the detailed audit report after completing the tests and analysis processes. Then, the audit team and the project team will discuss the report’s findings and understand the issues and vulnerabilities.

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