Security Audits 101: How to Find and Choose the Right Auditor for your Smart Contract

Smart contracts are self-executing digital agreements that operate on a blockchain network. They are automated to manage many tasks, including, but not limited to, negotiations, financial schemes, and supply chain management. Due to its automated processing, the security of these smart contracts is the biggest concern for any organization.

The purpose of this article is to assist in better decision-making for choosing the right security auditor for the audit of smart contracts.

What is a smart contract security audit?
A smart contract security audit is a comprehensive evaluation of the code and underlying architecture of a smart contract to identify potential vulnerabilities and security risks. The aim of the audit is to uncover any weaknesses or bugs in the contract code that could be exploited by malicious actors, such as hackers or fraudsters. The audit includes a review of the contract's code logic, deployment procedures, and potential attack scenarios to ensure the contract is secure and meets best practices for blockchain security. The results of the audit can be used to make improvements to the contract's code, reducing the risk of security breaches and increasing the overall trust in the contract.

It is a market practice to have a security audit of any smart contract before its deployment. After the deployment of the contract, it is complicated to fix the vulnerabilities in the code. Security auditors are industry professionals who seek to find any potential vulnerabilities or flaws in the contract. Around 50% of smart contracts’ vulnerabilities can’t be found without external audit. All things considered, a smart contract security audit is a crucial step in the creation process and aids in ensuring the trustworthiness and security of the contract.

Why are security audits necessary?
Security audits are necessary to reduce the risk of security breaches in smart contracts and to increase trust in the blockchain ecosystem. They help ensure compliance with security and privacy regulations and can uncover areas for improvement in the code. They also protect investments by identifying and mitigating vulnerabilities before the contract is deployed. According to recent surveys from QuillHash and Certik, most DeFi hacking attacks account for coding mistakes – which could've been prevented through a professional security audit (see Figure 1).

Figure 1: Factors accounting for DeFi hacks - Source: QuillHash

Factors to consider in a security auditor:
When selecting a security auditor for a smart contract, the following factors should be considered:

  • Experience: Rich market experience matters in identifying vulnerabilities and weaknesses in any smart contract. With a skilled security auditor's knowledge and skills, it can be less hassle to ensure a smart contract's reliability and security. Therefore, it is vital to work with security auditors well-versed in the latest security best practices.
  • Reputation: A security auditor with a strong market reputation is seen as reliable and trustworthy, which gives developers confidence in its security. In contrast, a security auditor with a poor reputation may raise concerns about the quality of their work and the security of the contracts they have reviewed. Therefore, working with security auditors with a good market reputation ensures that the developed contracts are of the highest quality.
  • Availability & Responsiveness: In this fast-paced world, security auditors must be available and responsive to the needs of their clients. This is necessary in cases where issues or vulnerabilities in a contract are critical to timely communication. By working with security auditors who are consistently available and responsive, developers can address problems quickly and efficiently.
  • Price & Value for Money: Ensuring that the auditor's services are reasonably priced and offer good value is essential. Hiring a reputable and experienced auditor can save a company significant time and resources in the long run. Their expertise can help identify and mitigate potential vulnerabilities before they become challenging issues. Ultimately, the cost of a smart contract security audit is a wise investment that can help protect a company's bottom line and reputation.

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Tips for finding and evaluating security auditors:

  • Research and reach out to multiple auditors: Based on the factors mentioned earlier, start by creating a pool of potential security auditors. This approach aims to keep all the options on the table. One good start is to initiate by surfing the internet and webpages to find contacts of potential security auditors. Alternatively, another recommended approach is networking and asking for referrals from market colleagues.
  • Ask for References and Case Studies: Once the pool of potential security auditors is finalized based on personalized factors, contact those security auditors, and review their portfolios. This includes analysis of their track records and successful security audits of smart contracts. The number of years in the industry and security audits for renowned companies/developers are significant factors to consider while shortlisting potential auditors.
  • Consult with a trusted third party: A trusted third party, such as a consulting firm, can bring objectivity and impartiality to the process, which can be helpful if one isn’t well-versed in smart contract security. In addition, a trusted third party can help identify and evaluate potential auditors, providing recommendations based on their expertise and experience. Working with a trusted third party usually offers additional support and guidance throughout the audit process, ensuring a smooth and effective completion of the audit.
  • Communicate the Needs and Expectations: Once the auditors are shortlisted, clearly communicate the requirements, expectations, and needs for the security audit. This would help auditing companies understand the situation and provide a quote accordingly. Close the deal with the most suitable proposal and quote.

Security audits are essential to ensure the trustworthiness of a smart contract. When choosing a security auditor, it is important to consider their experience, reputation, availability and responsiveness, price, and value for money. By researching and reaching out to multiple auditors, asking for references and case studies, and consulting with a trusted third party, organizations can find and evaluate potential security auditors to ensure they find the right fit for their needs.

About Truscova:
Truscova comes with 30+ years of academic research and hundreds of academic publications which pioneered the area of Formal Verification. The team combines academic leadership, industrial strength and Blockchain expertise. Truscova currently analyzes Solidity code combining Formal Verification techniques: abstract interpretation, constraint solving, theorem proving, and equivalence checking.

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