What are the security measures for smart contracts?
Smart contracts are self-executing programs that run on decentralized blockchains when predetermined conditions are met. These smart contracts have enabled the growth of decentralized finance (DeFi), which now holds over $200 billion in value.
Smart contracts are behind decentralized money market protocols that let crypto users earn high interest rates, and behind non-fungible tokens (NFTs) and all of their advantages. They are accounts on a blockchain and can hold balances and send transactions. While a user doesn’t directly control these contracts, user accounts can interact with them in different ways according to specific privileges.
Securing these smart contracts is sacrosanct: because of composability, a major flaw in a smart contract can affect almost every DeFi user and ultimately affect trust in a $200 billion market that’s growing at a rapid pace.
Securing smart contracts: challenges and risks
Developers looking to secure smart contracts face challenges that were unheard of before and realize their code is effectively securing people’s savings. While exploits in the DeFi space are not unheard of, major protocols have managed to stay safe thanks to some excellent work and understanding of the risks and challenges associated with these contracts.
The Blockchain Security Team at Coinbase has analyzed “a few hundred” Solidify security reports and found that the most common smart contract security risks fall into three main categories:
- Operational risks — Associated with authorization features in smart contracts being exploited
- Implementation risks — Associated with unintended smart contract behavior
- Design risks — Occurring when system features are exploited to alter intended smart contract behavior
The team delved deeper and detailed some of the most common risks seen in these reports. These include the use of super accounts with extra privileges in smart contracts: these are useful for projects managing treasuries or other complex operations. Even if a majority votes on these operations, an account must be able to order the smart contract, and that account can be compromised.
Blacklisting and burning functions, which allow a privileged role to prohibit a specific address from exercising an essential functionality, are also a significant risk. Tether’s freezing function is an example of their use in the wild.
Other smart contract risks to consider include contract logic being arbitrarily changed, the use of self-destruct and minting functions. However, these were just the operational risks, as implementation risks include altering the behavior of smart contracts, performing unauthorized transactions, and making the contract see altered account balances.
Design risks can allow attackers to, for example, alter the order in which the smart contract performs tasks to their own gain. These risks pose unique challenges for developers, but these are known best practices to follow.
Smart contract security: best practices
Vigilant developers need to watch out for a number of potential pitfalls and as a result, they’re advised to stay up-to-date with what’s going on and keep their contracts as simple as possible: more complexity makes it likelier they will miss something bad actors don’t.
Some of the best practices for smart contracts include being cautious when making external calls to untrusted smart contracts. These contracts can execute malicious code and open ways for attackers to come in.
Marking untrusted contracts and avoiding state changes after making a call to an untrusted external contract may help mitigate the risk associated with these contracts. On top of that developers need to make sure they prepare for the possibility of calls failing, and ensure they minimize the damage.
External contracts can fail accidentally or deliberately, it’s worth noting. Execution should only be delegated to trusted contracts.
On top of all this, developers are keenly aware that ether can be forcibly sent to an account. Attackers are able to do this and take advantage of on-chain data being public to create new attack vectors.
Some applications need data to be private up until some point to work, so the smart contracts used in them most require users to publish data only when necessary and in a way that ensures consistency. For example, in an auction, participants must first submit a hash of their bid value in an initial phase, and then submit their bid in a second phase: and both values must match.
Finally, it’s important to consider that some participants may leave and never return. Attackers can take advantage of developers not accounting for this by stopping payouts, for example. In a game where the payout only occurs when both players submit their moves, an attacker can simply never submit their move, locking the payout indefinitely.
As smart contracts are used to create bleeding-edge products and services, failing to abide by these best practices can lead to attacks developers haven’t even considered. A vulnerability sticks with users, who may never come back.
Using battle-tested code
Smart contracts have been around for a few years and throughout them, we have been able to observe what really works and what doesn’t — at least to a general extent. One thing that is known to work and is considered a best practice is a security audit.
Auditing code essentially means testing it against a number of potential scenarios and vulnerabilities, to stay one step ahead of attackers. It’s a form of battle testing that goes a long way in preventing vulnerabilities.
Blockchain cybersecurity startup OpenZeppelin is known for its work in the space, providing security products to build, automate and operate decentralized applications. OpenZeppelin performs security audits for major organizations in the space, including Brave, Coinbase, Compound Finance, and the Ethereum foundation.
The OMNIA Protocol token’s smart contract was created using only battle-tested libraries from OpenZeppelin, with public source code that has been reviewed by the top developers in the cryptocurrency space.
The code was created with a mechanism for a general pause in case of an emergency breach, has unit tests to check the most critical access control paths, and has been audited by a leading third-party auditor as well. The OMNIA ERC20 token’s smart contract audit report was published earlier this year. You can read the report here.
About OMNIA Protocol
By foreseeing the state of the current blockchain application network, we have committed to preparing, researching, and applying our technical expertise to our latest project, OMNIA.
OMNIA Protocol is a decentralized infrastructure protocol for securely accessing the blockchain so that no single point of failure will ever disrupt blockchain applications or wallets integrating with it.
OMNIA’s solution is truly decentralized and requires zero technical knowledge. Therefore, all users can set up their nodes in little time and effort. Learn more about the technological marvel behind OMNIA by following our Medium or reading our whitepaper.
