Smart Contract Audits for Businesses

Smart contracts are programs stored on a blockchain that automatically execute under specified conditions. They are part of a broader Web3 vision that eliminates middlemen, with transactions occurring directly between parties on blockchain platforms like Ethereum. Smart contracts can document and process production procedures, regulate licensing, and transfer property rights, offering a wide range of applications for businesses.

Smart contracts are written in specialized programming languages such as Solidity. The contract code specifies the conditions under which it will execute automatically. These contracts are then implemented on blockchain platforms like Ethereum and execute once the predetermined conditions are met.

Smart contracts are both decentralized and immutable, making them increasingly popular, albeit also with hackers. A notable example includes the theft of $50 million from a blockchain investment fund in 2016, exploiting a vulnerability in the code of a decentralized fund controlled by smart contracts. A smart contract audit is crucial for minimizing such risks.

A smart contract audit is a detailed analysis of the contract code to identify security vulnerabilities early and find solutions. Audits remove inefficient programming practices and prevent exploits by malicious actors, essentially preventing hackers from exposing vulnerabilities to other hackers. Exploits, which arise from code errors, act as door openers for hackers to access data and systems.

In the Decentralized Finance (DeFi) ecosystem, smart contract audits are well-established, offering an in-depth review of a protocol's code to identify errors, inefficient code, and solutions. Since smart contracts are immutably deployed on the blockchain, audits are an essential part of the security processes for any blockchain project. 

During an audit, the byte5 team analyzes the code, logic, architecture, and security measures of the application to identify potential issues. We specifically look for code areas vulnerable to attacks and suggest improvements and countermeasures.

Upon completion, we provide our clients with a summary report of our findings, solutions for any security vulnerabilities, and a roadmap for fixing all errors. A comprehensive smart contract audit ensures that companies can deploy their contracts with confidence in their application's integrity.

Security. In the development of blockchain applications, flawless code is essential. A thorough report from an audit provides assurance that smart contract security is guaranteed, and the application is ready for deployment. Even though blockchain technology is very secure, applications often have vulnerabilities, as our example above has illustrated.

Transparency. The costs of developing and deploying a smart contract can be significant. It is not uncommon for complex contracts to require an investment of €30,000 to €45,000, and for large organizations, the costs can reach up to $100,000. An audit combines manual and automated analyses to ensure that the blockchain security is solid before the smart contract is implemented. This gives investors and users confidence that their digital assets are protected, and the contract will function according to plans.

Trust. Furthermore, audits build trust among users, win the confidence of investors, and protect your company's reputation from potential attacks.

1. Overview

Projects provide byte5 with technical documentation, including source code, whitepapers, architecture, and other relevant materials. These documents give our auditors an overview of what the code aims to achieve, its scope, and precise implementation.

2. Automated Tests

Automated tests check every possible state of a smart contract and issue warnings about problems that could affect the contract's functionality or security. We also conduct integration tests, unit tests for individual functions, and penetration tests to detect and automatically address security vulnerabilities.

3. Manual Review

The byte5 team meticulously examines every line of code to identify errors and security vulnerabilities. While automated tests are effective in finding code errors, human developers are better at detecting issues with contract logic or architecture, identifying inefficient programming practices, finding optimization opportunities for transaction costs, and recognizing vulnerabilities to common attacks such as front-running.

Errors are classified by byte5 based on the severity of a potential exploit:

• Critical: Compromises the secure operation of a protocol.
• Significant: Centralization and logical errors that could lead to loss of user funds or control over the protocol.
• Medium: Affects the performance or reliability of the platform.
• Minor: Inefficient code that does not endanger the application's security but could lead to a negative user experience.
• Descriptive: Pertains to style or best practices.
  
  
  

5. First Report

We create an initial report summarizing code errors and other issues, along with feedback on how the project team can address them. Byte5 also offers services to help fix these issues. By resolving all problems, project stakeholders ensure their smart contracts are ready for deployment.

6. Publication of the Final Audit Report

Byte5 includes all results in a detailed final report, marking all issues as either resolved or unresolved. This report is made available to the project team and is often publicly accessible, so that users and other stakeholders of a protocol have full transparency.

Smart contract audits are not only a measure for risk minimization but also a tool for quality assurance that creates transparency and builds trust among users, investors, and other stakeholders. By combining automated tests with manual review, byte5 uncovers a wide range of potential vulnerabilities—from critical security gaps to inefficient code that can affect the user experience. By addressing all errors, you ensure that your applications are not only functional and efficient but also meet the highest security standards.