Smart Contract Audits

While blockchain technology itself, such as Ethereum and EOS, is secure, blockchain applications may not be and may have vulnerabilities. Bugs and exploits in smart contracts can frequently have serious financial consequences. This makes audits an important part of the smart contract development and optimization process.

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Benefits of Smart Contract
Audits for Your Business

To reap the benefits of smart contracts, such as their automation, self-enforcement, and security, it is extremely important that they are developed properly. Mistakes in smart contract development can turn what would have been an incredible efficiency gain into an expensive problem. 

Auditing your smart contracts will, therefore, provide you with the following benefits:

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Risks and vulnerabilities identificationA smart contract audit will seek to test and challenge the code of the contract in a variety of ways. This will highlight the operational, technical, and cyber risks to which the contract is exposed. This process includes the deliberate break testing of the contract, including through simulated attacks.

Code improvements – After the initial audit, a report is delivered that lists the issues that have been identified and provides recommendations for improvements to the code of the smart contract.
Once these fixes have been implemented, they are reviewed and tested again. This guarantees that the improvements resolve the issue and do not introduce new issues.

Performance validationApart from establishing risks and vulnerabilities, an audit also tests the execution of the contract and any variations that arise as a result of its execution. This process tests all possible outcomes and how these relate to the initial conditions and terms of the contract.

Optimization (Gas analysis)Each smart contract is executed against a blockchain network that the contract is made for. This normally involves also paying some fees in the cryptocurrency of that network. A smart contract audit can help you establish whether your contract is optimized sufficiently, based on its price.

ComplianceDepending on your location or on your industry, your smart contracts may need to be reviewed for liability and regulatory compliance. An audit can help you establish if your contracts are in accordance with regulatory requirements or need to be amended. 

RatingsSmart contracts are also used to define tokens (also known as token contracts) and the rights associated with being a token holder. Such contracts are also used to implement an initial coin offering (ICO) for such a token. If a contract has been audited, this increases the ratings for the token on ICO trackers and listings.

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The Smart Contract Auditing Process

LimeChain uses a variety of methods and approaches when auditing smart contracts. This includes: 

• Architecture Review 
• Unit Testing
• Computer-Aided Verification
• Manual Review

These approaches are used during an audit depending on the type of contract and its complexity. Here is how the process of auditing a smart contact unfolds:

1. Familiarization stage

This is the most important stage of the auditing process. Auditors study the project documentation and specifications to familiarize themselves with the business case. This helps them understand what the intended behavior of the smart contract is.

2. Architecture and design review

At this stage, the architecture of the smart contract is reviewed and how it implements the logic found in the documentation. This includes a review of the source code and libraries. This is done so that auditors understand what decisions were made during the smart contract development phase.

3. Units tests and review

Unit tests of the functions of the smart contract are conducted to check for their correctness. This includes testing of the units under various conditions and within different parameters. The purpose of these tests is to establish whether the functions of the contract are acting in accordance with the design.

4. Diagram construction and interactions analysis

Diagrams for the smart contract are constructed that specify the flow of the processes that lead to successful and unsuccessful transactions. This stage also includes an analysis of how different contracts interact with each other.

5. SWC Registry issues analysis

This stage analyzes the contract issues based on the Smart Contract Weakness Classification Registry (SWC Registry). This registry provides auditors with a list of various issues found in smart contracts, instructions on how to identify them, and specific remediation steps. It is an indispensable part of the auditing process.

6. Manual review

During manual review, each line of code is checked by the auditing team to determine whether it contains compilation and re-entrance mistakes or other vulnerabilities.

7. Bugs and vulnerabilities assessment

Any bugs and vulnerabilities that are found in the contract in the preceding stages are assessed for the degree of danger that they present. This includes an analysis of the possible consequences of these bugs for the execution of the contract.

8. Audit report construction

The smart contract audit process results in a report that details the steps that were taken and what was established. The report also provides guidelines on how to fix any issues that were found.

Types of Smart Contract Vulnerabilities

Common smart contract issues that are established during an audit include:

  • Standard and commonly found SWC Registry issues
  • Transaction-ordering dependencies
  • Mishandled exceptions and call stack limits
  • Unsafe external calls
  • Integer overflow / underflows
  • Number rounding errors
  • Reentrancy and cross-function vulnerabilities
  • Deadlocks / Logical oversights
  • Access control
  • Centralization of power issues
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This category includes contracts that have legal effects for parties that fail to fulfill their part of the agreement. They are also known as smart legal contracts.

Smart Contract Audit by
LimeChain

LimeChain has been developing smart contracts since 2017. A significant number of our smart contracts have been audited by industry leaders, giving us indispensable insight into the creation and auditing of smart contracts.
LimeChain has also developed its own smart contract development and testing frameworks for EOS, called EOSlime, and for Ethereum, called Etherlime.
Our auditing methodology includes an exhaustive analysis of smart contracts through the use of various approaches, both automatic as well as manual. Our expertise and experience in the field have been confirmed by numerous successfully implemented audits.

Do you require an audit for your smart contract? Get in touch with us to find out more about our auditing process and capabilities, and to discuss your needs and requirements!