Blockchain has been at the forefront of receiving significant security overhauls in the short time span of its development and usage. The rising popularity can be seen that up to March 2022, approximately $215 worth of total valued assets is stored in blockchain networks.
But as its scalability increases, the vulnerabilities start showing up. The Rekt database says that up to $1.2bn worth of decentralized assets were stolen in Q1 of 2022, putting a question mark on the security aspect of these decentralized applications.
This blog will remain focused on decentralized applications and their security aspects.
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What is DApp?
DApp or decentralized applications are digitized permissionless applications deployed and running on a blockchain network. As its name suggests, DApps are outside the purview of a single authority, existing on a peer-to-peer network of computers.
The application’s capacity to protect user privacy is at the heart of DApps. Users of decentralized apps are not needed to provide personal information to utilize the services offered by the app. DApps employ smart contracts to carry out transactions between two unidentified parties without requiring a centralized authority.
How Does DApp Work?
Unlike a standardized web application with a centralized authority operating it through the backend, decentralized applications wherein several users are simultaneously supplying or seeding content, consuming content, or performing both tasks.
There are two parts of a DApp. Look at the schematic for a better understanding.
These smart contracts working at the backend of a DApp lie at the core of its working. Smart contracts are crucial in determining the transaction between two anonymous parties without relying on a central authority. They use a specified blockchain for data storage and smart contracts for their application logic.
Users can still update data by publishing new content or purchasing through a front end that links to those nodes. They must sign transactions using their private keys, which are commonly stored in wallets. This architecture is designed to protect user privacy and control. The blockchain allows for completely transparent, open access, and immutable transactions.
With dApps, several nodes perform tasks similar to a traditional server, but these nodes don’t all belong to a single authority. Instead, they share the workload across all participating nodes.
DApp is probably the most popular usage of blockchain networks after crypto that came to the forefront post the development of Ethereum. Ethereum is the most significant DApp building protocol today. It allows the execution of complex instructions using smart contracts, only limited by the developer’s imagination.
Now that we know what DApps are and how they work let us look at the security aspect involved in a DApp.
Benefits of DApps Security
Before getting into the security aspect of a decentralized application, it is imperative to understand the immutable nature of the blockchain. DApps are harder to maintain, and developers cannot modify or update their codes once deployed. Therefore, one has to be entirely sure about their DApp working before putting it on the blockchain.
Smart contracts being open-sourced, if left vulnerable, are susceptible to hacking. Smart contracts or DApp Security audit is probably the best way to eliminate the vulnerabilities involved and prevent them from being exploited by hackers.
But, prior to discussing the ways of securing a DApp, firstly, analyze the security issue involved with a decentralized application.
Security Challenges of DApp or Decentralized Applications
As it has been already discussed, the immutable nature of blockchain makes it impossible to be modified once deployed. Following are a few other security vulnerabilities tempering the DApp safety.
- Open – Source nature of a smart contract
In some instances, the dApp code contains crypto key data, which will be open to attack if the code unintentionally contains private information or other access details. Typically, developers ought to keep the volume of data in the blockchain structure’s smart contracts to a minimum.
- Possibility of the data breach
DApps are connected to centralized data storage locations even though the framework is evolving. This link implies that data breaches are still a risk even with a cloud-based solution.
- Human errors
Smart contracts are developed by humans who are bound to make errors that can hamper the functioning of the dApp, creating a pathway for hackers to exploit those bugs.
- No intermediary
Although it has been shown as a merit of the decentralized application, no middlemen involved could be an issue in case of an attack as no recourse is available.
- Malicious DApps
It is an application built to entice users to think this has been designed for a real purpose. A malicious DApp is a code purposely compromised by DApp makers to steal funds.
How to Secure your DApp?
There are a few points that should be considered by different stakeholders involved with a decentralized application.
- The project/ owner
Note: Here, we are considering a project owner separately from a developer.
To ensure the security of the project, the first thing to be done is DApp/smart contract audit.
DApp audit includes third-party scrutiny of your project for any loopholes and vulnerabilities residing in it.
To identify potential threats in your smart contract, a dApp audit company offers a thorough evaluation of the code by Web3.0 professionals. This works as an additional layer of protection to your smart contract, thereby enhancing the investors’ trust.
Additionally, you can go for bug bounty platforms where you can directly indulge with hackers to detect the bugs in your project.
Developers must first understand the security weak points associated with the language used for smart contract development.
Here, we will talk about four key issues most frequently observed with a Solidity smart contract.
- Data privacy: You should save data in an encrypted format rather than in clear form if confidentiality is required.
- Randomness: Occasionally, some Dapps, like gambling games, must randomize. It might be challenging to guarantee equal processing across all nodes without leaving the application vulnerable to manipulation that takes advantage of the predictability of pseudo-random generators.
- View functions: The read-only functions declared as views may affect state variables. Thus you should be aware of these functions.
- Gas limits: Whether you configure your transaction’s gas limits to be low or high, you should be cautious since attackers can try to take advantage of them.
Exploiting these bugs for severe malfunctions of the DApp might lead to Denial of service or other operations in your DApp.
Users are the ones that interact with the blockchain using their crypto-tokens. Before investing your asset into a decentralized application, the user must ensure the reliability of the entity in question.
Verifying the developer’s identity, analyzing the whitepapers, and checking for a third-party security audit are a few such points to be considered before making a DApp transaction.
How much does a DApp audit cost?
The type and complexity of a DApp audit affect its audit price, and understanding the business logic used also depends on the quality of the developer’s documentation.
Alongside, the audit price depends on the DApp audit company in question. To get an accurate audit price estimation for your DApp security audit, visit our Security audit cost calculator.
Decentralized applications, or dApps, have become one of the hottest developments in the crypto world, promising a more open internet with genuine privacy, no censorship, and financial inclusion.
With the rising use cases of decentralized applications, paying keen attention to security is imperative to prevent hacking. A smart contract audit is an essential component required to ascertain DApp security.