Expert Opinion Series on Code Audits
The year 2021 has been a phenomenal year for the crypto ecosystem. Everybody is looking up to major advancements and revolutions in the new year. We recently started the UniFarm’s Founder Opinion Series where several industry leaders and investors come together under one roof to give a candid take on what they feel. Presenting its second edition to you with a common question that revolves around what we just talked about – A look back on the year 2021 and what can be done better this year to shape and disrupt the market.
Many industries have surely been transformed by blockchain technology. However, the hacks and vulnerabilities of several well-known blockchain applications have resulted in significant setbacks for blockchain’s long-term development. Wasn’t it the case that blockchain was primarily concerned with providing the highest levels of security? When it comes to assuring security, the Ethereum blockchain network possesses immense computational capacity. Blockchain networks, on the other hand, may be safe, although the apps that run on them may not be as secure as envisioned.
Here is the question we asked from founders, CEOs, and core team members of various projects and this is what they had to say.
Scammers grabbed $7.7 billion worth of cryptocurrency in 2021, what is your opinion on code audits? Can they mitigate the risks?
Max Sizz, SpaceSwap
An audit is important and of course should be made. But unfortunately audits do not completely reduce the risks since they are mostly carried out according to standard templates and do not take into account some unexpected scenarios. They check compliance to the industry standards, and often concern the degree of centralization of the project, which is an important element, of course, but doesn’t help much against break-ins. What is much more effective is a regular deep technical audit. Therefore, ideally, it is better to conduct an audit from several companies with different approaches, this will make it possible to get the most complete and objective picture. But one should always understand that the risks just go down, but not completely vanish.
Naimish Sanghvi, Coin Crunch India
Obviously, code audits are important, but more than that an open-source testing is also a good idea to ensure that white hat hackers can test it and find vulnerabilities. Moreover, incentives like bounty programs also help in making safer contracts.
Atharva Sabnis, ItsMyne
Code audits can help mitigate risks as long as the auditors are cognizant of the limitations of their audit, and are transparent in conveying those to the relevant stakeholders. Projects should also not rely on code audits as the ONLY risk mitigation measure but should try to have backups as well.
Nugraha, Kommunitas
It is very important and must be done because if this reduces the risk why not do it first before the project is started and running, many of us are not aware of it, early investors should be aware of that and should be their standard for investing there, I think in the next year legality will be in the spotlight, because it will reduce unwanted risks a lot.
Aless, AVME
Codes audits help to spot flaws but if the people behind the projects don’t fix them is just a matter of time until some malicious actors start to take advantage of those irregularities.
Chirag Chandra, UniFarm
Certainly and strongly I believe that auditing smart contracts from time to time are necessary for the filtration of malware and attackers. As no firewall is a complete firewall and there is always a back door, a blockchain is only as strong as the security it has in its ecosystem. Auditing of codes might or might not mitigate the overall risk but they can certainly minimize them.
What are Code Audits?
A smart contract audit is a thorough systematic inspection and analysis of the code of a smart contract that interacts with a cryptocurrency or blockchain. This technique is used to identify faults, issues, and security vulnerabilities in the code in order to provide enhancements and fixes. Smart contract audits are often required since most contracts deal with financial assets and/or valued objects.
Such tests are complicated since smart contracts often interact with one another, and any interfaces with third-party systems might potentially make the system susceptible. As a result, the tests are often extended to other smart contracts participating in any transactions, including those with which the ones interact. These inspections often comprise both automated tests and human code analysis.
Smart contracts often handle considerable amounts of money, and a single defect or vulnerability may result in significant losses. More specifically, the users and stakeholders of the aforementioned decentralized application may lose all of the assets that comprise the ecosystem.
The auditors’ suggestions are communicated in advance to the project team, and their actions in response are documented in the final report. It is regarded as a symbol of the project’s authenticity and integrity. As a result, teams are eager to get an audit in order to gain user trust and boost the project’s trustworthiness. These audits are usually carried out in stages.
The first stage is for the team and the auditing group to agree on the audit’s scope and requirements. It implies that the auditors are provided the smart contract’s design, purpose, architecture, and other information. The testing step follows, in which auditors verify individual functions (unit tests) and later bigger components (integration tests).
