NFT Smart Contract Development with Risk-mitigating Measures
Non-fungible tokens (NFTs) have become a phenomenon since someone sold an NFT art for a whopping $69million in March 2021. We all know that NFTs are blockchain-linked digital assets with the potential to represent anything & everything. This underlying technology — the NFT Smart contracts — facilitates the seamless trading of digital assets.
As some recent occurrences have demonstrated, smart contracts are not always “clever” (i.e., faultless) enough to do what people wish. Occasionally, even an accidental error in smart agreements could result in significant, unmanageable losses to development teams and investors.
Recent Smart Contract Bug Incidents
Smart contracts are self-executing code on a blockchain network — what if it doesn’t execute properly or what if it executes with bugs? That’s what had led to MonoX (a DeFi project) losing $30million worth of cryptocurrencies — due to the breach in swap contract. The estimated stolen amount includes $18 million in Wrapped Ethereum (WETH) and $10 million in Polygon (Matic).
Very recently (April 2022) — Micah Johnson (an American Baseball star) launched his much-awaited NFT collection Akutars — the 3D avatars based on the popular Aku NFT series. However, the big ‘mint’ has come to a standstill when someone found vulnerabilities in the smart contract. As a result of not adopting mitigating measures — 11,539 ETH (worth $34million) were locked in a flawed smart contract and remained inaccessible forever.
Well — one thing is for sure — nothing is unhackable on the internet; however, hacks & security vulnerabilities are avoidable. NFT project owners and developers can rectify the flawed smart contracts if preventive steps (or) mitigating measures are implemented.
Here are some of the Risk-mitigating Measures:
If you’re thinking about creating your own smart contract, implement the below measures to safeguard it:
⚈Host A Bug Bounty Program
Bug bounty program or vulnerability reward program (VRP) is a concept that rewards individuals for identifying bugs in smart contracts. This program is integral to NFT smart contract development that supplements internal code audits. Many smart contract development companies implement this program as a part of their packages, paying out crypto rewards to individual security researchers.
⚈Incorporating A Failsafe Mechanism
Given the nature of smart contracts, the hiring party may ask the party retained by the agreement to create an integrated fail-safe mechanism for the contractual smart contract so that, in the event of a problem, the hiring party may choose to “kill” the smart contract and release the money or tokens.
Additionally, the employing party could stipulate in an agreement that specific backup oracles should serve as the reference in the case the primary oracle expires or becomes unavailable because external data may occasionally be required to make smart contracts viable or operational (rather than allowing the retained party to resort to other external data source at its own discretion).
📌Regular Smart Contract Audits
Developers deal with smart contract security vulnerabilities now and then. However, it is rectifiable in two ways: one is performing a full-unit test that identifies the functionality problem in a contract — also eliminating them at the start, while the other is deploying contract auditors to perform smart contract security audits. It will identify the possible bugs, bifurcating the possible smart contract hacks. Some companies offer smart contract audits as a part of their NFT smart contract development services package, which you can hire at ‘your’ budget. Most importantly, ensure that the developer embraces code uniqueness to mitigate future exploits.
⚈How Are Risk-free Smart Contracts Created?
Making an NFT is referred to as minting. The smart contract code determines the NFT’s attributes, which adds them to the appropriate blockchain where the particular NFT is coded. In essence, you are writing the smart contract’s underlying code.
However, while coding the contract, there are some standards (a set of rules) that it has to comply (with). Here are those standards;
“Ethereum is the first blockchain technology to Incorporate smart contract standards.”
🔥ERC-721 Standard
ERC-721 is an NFT-specific open standard that issues rules on building NFTs on the Ethereum chain. Also, this standard defines the working of Ethereum-reliant smart contracts. Moreover, a unique ERC-721 standard can manage multiple tokens.
🔥ERC-1155 Standard
Each token ID can represent a different adjustable token type with its supply and metadata properties, thanks to the ERC 1155 multi-token standard.
TRON, EOS, TEZOS, and Solarium are alternative smart contract blockchains offering NFT features in addition to Ethereum. This standardization of NFTs will help the interoperability of the tokens.
⚈Choose Your Technology Partner Wisely!
Building a smart contract is all about coding. And, there is this popular axiom: coding can never be completely error-free. But wait, the parties involved in developing the contracts can mitigate such risks through cutting-edge solutions.
Are you looking to create smart contracts for your business? Hire a professional smart contract developer to implement your objectives within your budget and specified timeframe.
