Being the second-largest protocol in the blockchain sphere, Ethereum has facilitated the belief of Web 3.0 for all. Smart contracts, the most talked-about use case of blockchain technology, came to the forefront with the entry of Ethereum into the blockchain space in 2015.
The central concept driving Ethereum’s development is creating and deploying smart contracts that run across a distributed network rather than on a centralized server.
Although, it does not negate the fact that even Ethereum smart contracts are not free from flaws. Exploiting solidity code led to several crypto-heists and is still on a rising slope. It is signifying that there is no scope for ignoring the security aspects of Ethereum smart contract deployment.
This blog will discuss Ethereum smart contracts and the pros and cons of auditing the same, citing security reasons.
Ethereum Smart Contract
Before hopping onto the auditing domain, let us first understand what an Ethereum smart contract is and its various use cases.
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What is an Ethereum Smart Contract?
Ethereum smart contract is simply a set of codes that lives at a specific address on the Ethereum blockchain and runs on it.
Similar to Ethereum accounts, smart contracts have a balance and can send transactions across the network. No specific user controls them. Instead, they are deployed to the network and run as a computer program.
User accounts can then interact with a smart contract by submitting transactions that execute a function defined by them.
Smart contracts, like any other contract, define a set of rules and enforce them automatically through code.
Use Cases of Ethereum Smart Contracts
If you have been interested in the blockchain domain, you would probably have heard about DApp, Defi, and Token being its most popular use cases.
Let us look at the other spheres deploying smart contracts to interact with a blockchain.
- Health care management
- Identity management
- Supply chain management
- Decentralized exchange
- Wallets and many more.
Now that we have a fair understanding of the Ethereum smart contract, moving to the security domain of the same.
Here, we will discuss the pros and cons of auditing Ethereum smart contracts- the first step to blockchain security.
Pros of Auditing Ethereum Smart Contract
Being trendy has its downsides, and Ethereum, which ranks second in the crypto-sphere, is undoubtedly in the spotlight of cyber criminals!
The history of crypto and Blockchain attacks and scams has taught us one vital lesson: there is no more significant mistake than deploying unaudited code on the blockchain. One can never imagine the magnitude of loss caused by even the slightest vulnerability in your smart contract.
Here are a few other pros of putting an audited smart contract on the Ethereum Mainnet.
- Avoid Costly Mishaps
Blockchain is an immutable distributed ledger system. Once deployed, you cannot change your code for errors. Hence, ensuring that your smart contract is thoroughly verified for vulnerabilities is imperative.
Auditing your code early in the development lifecycle prevents potentially disastrous vulnerabilities later in the development lifecycle.
- Expert Analysis
Although the audit process can be automated and manual or an integration of both, manual auditing adds an expert view of your code. Manual auditing includes a thorough review of smart contracts in a line-by-line manner to detect any flaws present.
- Continuous Validation
Usually, an audit firm offers re-audits post-code refactoring. It implies that after performing an audit, developers change the code to remove errors and optimize based on the recommendations of the Ethereum smart contract auditors.
After making the required changes, auditors will reverify the code if it works as per the intended behavior.
- Analytics Reports in Depth
Essentially, a detailed auditing report specifies the bugs in the smart contracts categorized based on severity levels. An analytics report allows the developer to make vital changes in order to optimize the code for its performance.
- Code optimization
Auditing not only helps in removing code for errors but also helps in the optimal utilization of time and resources. Your code may not have any severe errors, but it is not performing at its optimal capacity. Auditing adds an expert review to your code, recommending changes for optimized performance.
Cons of Ethereum Smart Contract Audit
With every coin having a flip side, auditing also comes with its demerits. Citing the disadvantages of auditing in no way means we are discouraging you from getting your contracts audited.
Here are a few cons associated with Ethereum smart contracts auditing.
- Auditing is a costly affair.
Sometimes auditing can cost thousands of dollars, which adds an additional burden on the exchequer. The Ethereum security audit usually make smart contract deployment an expensive practice.
- Requires trusting a third party
One has to share all the relevant information with the auditors for a smooth auditing process. It includes whitepapers, business requirements, technical specifications, and others. This demands building a trusting relationship with your auditors that can have its own consequences.
- A smart contract audit alone is not enough.
Auditing is not a new practice. Still, headlines highlight Ethereum scams now and then, which signifies that auditing is probably not the only security layer required by a smart contract. Stepping ahead with practices like bug bounty is advisable.
- Auditing is a time-consuming process.
Although simple contracts like crypto-tokens can take a few days for completion, smart contracts with complex tokenomics like DApp, and Defi might take up to a few weeks or months. This, in turn, can lead to delayed transactions.
One of the significant issues confronting smart contract adoption today is security. Because blockchain technology is immutable, it is impossible to edit the code after deploying it on the mainnet.
Placing smart contracts without conducting adequate audits may result in unfavorable outcomes, such as deviations from the contract’s intended performance.
Smart contract auditing ensures your blockchain system’s security and efficiency. Given the complexity of blockchain technology and the growing number of smart contract users. Smart contract auditing is becoming imperative to develop a secure blockchain asset.