Comprehensive Guide to Smart Contract Auditing

6 min readOct 5, 2024

Introduction to Smart Contract Auditing

Smart contract auditing is a critical process in the blockchain ecosystem, ensuring the security and functionality of smart contracts. Given the immutable nature of blockchain technology, vulnerabilities within smart contracts can lead to significant financial losses, making audits essential for any project deploying smart contracts. This article provides a detailed exploration of the auditing process, common vulnerabilities, and best practices for conducting thorough audits.

The Audit Process Overview

The audit process can be thought of as a ten-step framework, outlined as follows:

1. Read Specification/Documentation

Understanding the requirements, design, and architecture of the project is crucial in the auditing process.

Specifications often begin with the project’s technical and business goals, which should be reflected in the smart contract implementation.
Documentation should describe how the project has been implemented based on the design and architectural requirements.
Specifications address ‘why’ something has been implemented, while documentation addresses ‘how’.
A detailed specification and documentation save time and effort for auditors, preventing assumptions that can lead to vulnerabilities.
In the absence of both specification and documentation, auditors must infer the project’s goals, requirements, design, and architecture from the code, which can be time-consuming.

2. Running Static Analyzers

Automated tools, such as linters or static analyzers, investigate common Solidity pitfalls and best practices.

Tools like Slither and MythX perform analyses on smart contracts to detect security issues and adherence to best practices.
Evaluating findings from these tools, usually available in seconds or minutes, serves as an excellent starting point for deeper manual analysis.
False positives may occur and need verification through manual checks to ensure accuracy.

3. Manual Code Review

Conducting a manual review is essential for understanding business logic and detecting vulnerabilities.

Automated analyzers do not grasp application-level logic and constraints; therefore, manual analysis is needed to identify security deviations relative to the specifications or documentation.
Auditors often infer business logic and evaluate constraints directly from the code or through discussions with the project team.

4. Running Deeper Automated Tools

Utilizing deeper automated tools, such as fuzzers and symbolic checkers, requires more setup but aids in discovering edge cases.

These tools should be employed after an initial manual code review or discussions about the specifications.
Analyzing the output of these tools requires expertise, and understanding their inner workings can help evaluate the findings effectively.
While false positives can be challenging to sift through, true positives identified are often significant.

5. Brainstorming with Other Auditors

Collaborative brainstorming can help auditors share insights and identify vulnerabilities.

Some audit firms promote discussion among auditors, while others encourage independent analysis to prevent bias.
A hybrid approach, where auditors initially brainstorm and later work independently, can lead to a more comprehensive audit.

6. Discussion with the Project Team

Maintaining open communication with the project team is crucial for clarifying assumptions and findings.

Findings may be shared privately with the project team to discuss impacts and fixes.
Regular sync-up calls can be helpful if the audit spans multiple weeks, ensuring everyone stays aligned on the audit process.

7. Report Writing

The audit report compiles the entire assessment and presents all audit aspects.

An executive summary highlights the report with an overview of vulnerabilities found, making it easier for stakeholders to grasp the key issues.
The report focuses on findings, their severity, exploit scenarios, and potential remediations.
It may also address code quality and best practices that influence the introduction of vulnerabilities.

8. Report Delivery

Delivering the report to the project team is a critical milestone in the auditing process.

Delivery typically occurs through a shared document and is accompanied by a readout of highlights, ensuring clarity on the findings.
The project team usually reviews the report and responds with counterpoints on findings and suggested fixes.
Depending on agreements, the audit report may be released publicly or kept private for sensitive projects.

9. Evaluating Fixes

Post-audit, the project team may work on required fixes and request the audit firm to review their responses.

Fixes may address most findings, requiring confirmation of their efficacy.
Findings may be contested or acknowledged as within the project’s acceptable risk model.
This evaluation typically takes no more than a day, ensuring timely adjustments and improvements.

Manual Review Approaches

Auditors have different approaches to manually reviewing smart contract code for vulnerabilities. Here are several common strategies:

Starting with Access Control

Access control is fundamental for addressing authorized access.

Smart contracts may have different permissions for various actors involved in the transaction process.
Understanding the access control implemented is essential for detecting violations, ensuring that only authorized entities can perform sensitive actions.

Starting with Asset Flow

Evaluating the flow of assets managed by smart contracts is crucial for understanding potential vulnerabilities.

Considerations include authorized addresses, time windows, types of assets involved, reasons for withdrawals, and amounts being transacted.
A clear understanding of asset flow can help identify potential points of exploitation or mismanagement.

Evaluating Control Flow

Control flow analyzes execution order across smart contracts.

Inter-procedural control flow is indicated by call graphs, which visualize how contracts interact, while intraprocedural control flow is dictated by conditionals and loops within individual contracts.
Evaluating control flow is essential for ensuring that contracts operate as intended without unexpected behaviors.

Evaluating Data Flow

Data flow analyzes the transfer of data across smart contracts.

Inter-procedural data flow involves understanding how function parameter values are passed between contracts, while intraprocedural data flow focuses on variable assignments within a single contract.
Evaluating data flow helps ensure that sensitive data is managed appropriately and is not exposed to unauthorized access.

Inferring Constraints

Auditors may need to infer application-level constraints from business logic embedded within the smart contracts.

Language-level and EVM-level constraints are part of the specifications, but application-level constraints may be implicit, requiring careful analysis to uncover.
Understanding these constraints is vital for identifying potential edge cases and vulnerabilities that may arise from unexpected inputs or behaviors.

Common Vulnerabilities in Smart Contracts

While the auditing process is thorough, it’s essential to be aware of common vulnerabilities that may arise in smart contracts. Here are some of the most prevalent issues:

Reentrancy Attacks

Reentrancy attacks occur when a contract calls another contract and the second contract invokes the first contract again before the first invocation is complete. This can lead to unexpected behavior, such as draining funds from the first contract.

Integer Overflow and Underflow

Integer overflow and underflow vulnerabilities arise when arithmetic operations exceed or drop below the maximum or minimum value allowed for a given integer type. This can lead to unintended consequences, such as allowing users to send more tokens than they possess.

Front-Running

Front-running occurs when a malicious actor sees a pending transaction and places their own transaction ahead of it to take advantage of the information. This can result in the original transaction being executed at a disadvantage.

Access Control Issues

Failure to implement proper access control mechanisms can allow unauthorized users to execute sensitive functions, leading to potential losses or manipulation of the contract’s state.

Timestamp Dependency

Contracts that rely on block timestamps for critical logic can be manipulated by miners, leading to unintended behaviors.

Best Practices for Smart Contract Auditing

To ensure a thorough and effective auditing process, consider the following best practices:

Clear Documentation: Maintain comprehensive specifications and documentation to guide auditors in understanding the project’s goals and logic.
Automated Tools: Utilize automated tools for static analysis and deeper investigations to identify common vulnerabilities quickly.
Manual Review: Conduct thorough manual reviews to understand business logic and detect potential issues that automated tools may miss.
Collaborative Approach: Foster collaboration among auditors and open communication with the project team for ongoing discussions about findings and solutions.
Regular Updates: Keep the auditing process iterative, allowing for continuous updates and evaluations as the project evolves.

Conclusion

Smart contract auditing is a vital component of blockchain security, ensuring the integrity and reliability of decentralized applications. By following a structured audit process, understanding common vulnerabilities, and adhering to best practices, teams can mitigate risks and deliver secure smart contracts. The meticulous nature of this process ultimately safeguards users and maintains trust within the blockchain ecosystem.