Smart Contract Audit: Why and How
Smart contracts are one of the most important staples in the DeFi ecosystem. The smart contract can automate the process, improving the processes of all businesses regardless of industry niche differences.
More and more businesses are being convinced to adopt smart contracts on the blockchain to ease their growth and expansion. However, the smart contract comes with a technical vulnerability. If the codes written in the software are not good enough, it might expose slits where hackers can enter to jeopardize the system.
When there are flaws in the system, it is important to fix them ASAP before the companies suffer losses. In this case, the smart contract auditing service is very important to conduct.
Smart contract auditing is a common activity in DeFi projects such as lending platforms, exchanges, and many others.In these particular projects, the smart contract is the core part of the software. The logic is implemented in the smart contract to govern all of the participants and be compliant with the regulations.
Why is a smart contract audit imperative?
A smart contract development audit is indeed crucial for all companies, regardless of niche differences.
In the world of DeFi and cryptocurrencies, the cause of the crash could happen because of technical codes. It could also happen because of human errors. But since the process is done automatically, the smart contract audit services are a top priority.
The smart contract auditing service’s main objective is to find bugs, risks, and errors in the code. The audit usually takes place before the deployment of the smart contract on the main network. However, it is also possible that the smart auditing is conducted on the private blockchain.
All of the blockchain projects would require the smart contract audit services because the decentralization platform’s main characteristics are openness and permissionless. Therefore, one will need to conduct a smart contract audit to confirm the safety and security of the network.
In any blockchain and crypto project, the smart contract audit is an important staple that ones will not overlook. For instance, when a project is going to conduct an ICO – initial coins offering, the results of the smart contract testing will be one of the first documentations to be seen. It is also possible that the external audit takes place before the ICO launch.
With the results of the smart contract audit, it will give peace of mind to retail investors to make their deposits in the particular coins or tokens.
The projects that are not able to show good results from the smart contract audits are less appetizing. Chances are, not many experts would love to recommend the particular projects because they are not sure about the safety and security of the projects.
The more convincing results of the smart contract audits must be conducted by an external party.
In 2020, there were numerous cases of smart contract breaches due to poorly written codes in the software. On December 28, 2020, there was a theft of $3 million from DeFi Protocol Cover. The hackers used mining vulnerabilities by investing assets, withdrawing them for profits, and repeating the process several times. But luckily, the hackers returned the funds. What a good hacker. But from that story, we can see that poorly written codes can really jeopardize your DeFi project.
A smart contract audit might seem to be daunting. But it is necessary to improve your project’s visibility and positive image.
What is a Smart Contract Audit?
A smart contract audit is a sophisticated method of examination of a smart contract’s code on blockchain to find bugs, errors, issues, and security risks.
The smart contract audit demand has been increasing alongside the uptrend of the DeFi projects and platforms.
What is DeFi?
There are many ways to describe the word “DeFi” to you. DeFi is the short form of decentralized finance. As the name suggests, its main objective is to reinvent the existing financial systems with cryptocurrencies. As a result, the absence of a third party acting as an intermediary is the primary feature of this movement. the DeFi platforms, users can say goodbye to human third parties such as agents, brokerages, bankers, and others.
DeFi solutions run without central authorization from a person who controls the system. In many cases, the centralized system controls the system, alongside with the assets of its clients. But in the DeFi ecosystem, the digital asset owners can reserve theirs with total control.
How does DeFi work?
Decentralization is the main characteristic of DeFi. Therefore, the system completes the financial transactions without the interference of a third party or middleman. That’s how the DeFi works in a nutshell.
With the absence of the intermediary, who’s going to execute the transactions then? The answer is in the smart contract.
What are some of the leading DeFi protocols?
It has only been three years since its first inception in the world. However, dozens of protocols and applications for the DeFi have been developed and used by many people.People use smart contracts for different purposes. But here are the leading DeFi protocols: coins, tokens, wallets, stable coins, staking, trading, borrowing, lending, saving coins, and many more.
Numerous projects are added to the world of DeFi one by one. It is exciting to see what will be added in early 2022.
How do you get started with DeFi?
If you’re new to DeFi, you will want to read all about the DeFi basics first before proceeding. Using the DeFi protocols is usually relevant to the top networks like Binance Smart Chain or Ethereum. But there are also other blockchain networks that are worth checking out. They also have good features and support for particular projects. Choosing a network will be an important thing to do in the early phase of your DeFi project creation.
All in all, it will be up to your needs and requirements. When you’re brainstorming ideas, it’s a good idea to invite your developers team over to your in-house room so they can share their thoughts as well.Then, you will need to learn about the DeFi project life cycle as well from your professional developers. This will give you a head start on the processes that you will go through until your solution is deployed in the system.