Six Easy Steps to Secure Your Ethereum Smart Contracts

Ethereum uses "smart contracts," or programmable software programs built on blockchain technology, to provide decentralized applications (dApps), non-forgeable tokens (NFTs), and decentralized autonomous organizations (DAOs). ) to provide power. The rich functionality provided by Ethereum smart contracts enables web3 developers to create complex blockchain-based applications.

However, the instability of smart contracts increases vulnerabilities, bugs, and errors, and as the market capitalization of cryptocurrencies reaches trillions of dollars, black hat hackers are looking for weaknesses in smart contracts that they can exploit.

Introduction to Ethereum Smart Contracts

Ethereum smart contracts are written in Solidity, a language similar to C++ and Javascript. The Ethereum Virtual Machine (EVM), a virtual supercomputer that runs Ethereum smart contracts and is dispersed across numerous nodes across the world, is in charge of managing their execution. Ethereum smart contracts operate on the Ethereum blockchain.

The architecture of Ethereum smart contracts may be different from other contracts. Smart contracts can be simple contracts with limited functionality, or complex contracts with multiple layers of functionality.

4 Benefits of Smart Contracts

Regardless of their intended design, smart contracts provide the same benefits.

1. Immutability

Smart contracts cannot be easily modified (unless it is pre-programmed), which makes them resistant to unauthorized changes. Once a contract is verified and alive on the blockchain, it takes significant effort to change or upgrade the code of a smart contract.

2. Trust

By design, a smart contract automatically executes a set of instructions when predetermined conditions are met. This happens without external controls, so participating users can trust the code to work without human intermediaries. Two people can transact without trusting each other, knowing that the smart contract will act as a fair arbiter.

3. Cost-effectiveness

The combination of smart contracts and legal documents, (smart legal contracts) can simplify transactions between individuals and eliminate the need for middlemen. With no intermediary compensation, parties can spend less on enforcing and enforcing the agreement.

4. Speed

Every smart contract operates on conditional programming (i.e. if this, then that). These programmed actions occur immediately when the logical rules of the contract are satisfied. As a result, transactions can happen faster than traditional systems.

Six Proven Ways to Protect Ethereum Smart Contracts

Smart contracts running on the blockchain will transform governance, finance, IoT, and many other industries for users around the world. However, smart contract security vulnerabilities must be taken seriously as developers must consider all security challenges.

Below are some basic smart contract security best practices that web3 developers must adopt when building dapps on Ethereum and EVM compatible blockchain.

1. Strictly implement smart contract audits

In 2022, it should be a crime to deploy a smart contract without a security audit. Even so, many developers are rolling out unaudited smart contracts. The State of DeFi Security Report from Certik shows that the majority of exploited smart contracts are not security audited.

Understandably, hiring a smart contract auditor is not cheap. But getting the safety check right can save you even more in the days to come. In DeFi, millions of people have been lost in hacks that exploit weaknesses in botched code.

A good blockchain security auditor follows a well-established audit process to find flaws in the smart contract code and uncover errors that went unnoticed during the development process. Additionally, they can give useful advice on smart contract fixes and optimizations before deployment.

2. Test your code

Test, test, test your code to find bugs and other vulnerabilities.

Rigorous testing is perhaps the easiest and most effective way to ensure that smart contracts perform as expected once they are deployed to mainnet.

Deploy the smart contract on the test network to see if it has any anomalies. That way, you can tell if the protocol is behaving the way it should.

Testnets for Ethereum smart contracts are advised, including:

• Rinkeby

• Kovan

• Ropsten

• Truffle

Need Testnet ETH? Start testing your contracts with Alchemy's free Rinkeby ETH faucet .

Run unit tests to isolate individual code fragments

Unit testing is also a good idea to improve contract security. Unit tests look at a single part of your code, so if something fails, you know what went wrong.

Before integrating each new function into a smart contract, it is a good idea to run unit tests for it. Remember, smart contracts are immutable in nature, and it is impossible to patch the code if a bug occurs later.

3. Review code with peers

If you work in a team, make sure each member conducts an independent code audit and provides detailed feedback. Individual developers may wish to find a trusted colleague to peer review their smart contract code throughout the development process for increased security.

4. Reduce software complexity

The ultimate rule of software security is to keep the code simple. The more complexity in the code, the more variables there are, increasing the chances of failure.

As Dutch computer scientist Edsger W. Dijkstra puts it. "Simplicity is a prerequisite for reliability".

This does not mean that you should avoid building feature-rich smart contracts, however, you should start with a simple architecture at the beginning and slowly expand functionality over time using clean code and familiar patterns.

5. Implement fail-safe protection

"Prepare for failure" is a good maxim to remember while creating Ethereum smart contracts. No matter how many times you test, you will never be able to cover all bugs that could affect your smart contract. Therefore, it is necessary to design a fail-safe mechanism for your Ethereum smart contracts.

Fail-safe mode is useful for limiting the damage of malicious attacks. They are designed to trigger as soon as abnormal smart contract activity is detected.

4 Examples of Smart Contract Failsafe Protection

Examples of fail-safe protection for EVM-compatible smart contracts include.

1. Short Circuit

"Short circuiters" can be used to prevent functionality from executing when bugs and vulnerabilities are found. With shorts, you have two options for activating them.

• Give trusted administrator’s permission to trigger circuit breakers

• Program the short circuit mechanism to operate when preset conditions are met.

Because smart contracts are automated, short circuiters limit operations when errors occur.

2. Speed ​​Buffer

A reducer is a fail-safe mechanism that slows down malicious behavior, and while it won't stop an attack, a reducer gives administrators enough time to take immediate corrective action.

A prime example of an accelerator comes from the infamous DAO hack in 2016. The procedure ensures that withdrawals of funds from the DAO are only possible after 27 days, which keeps the funds in the smart contract until the developers are able to retrieve them.

3. Rate Limiting

Rate limiting can control how often a function is called within a certain time frame, providing a stopgap measure to prevent repeated calls to a function to drain locked funds (such as a reentrancy attack), issue a large number of ETH tokens, or perform multiple withdrawals loophole.

Additionally, rate limits at the contract level can be used to limit the number of tokens issued within a time interval.

Given the number of vulnerabilities for bad actors to issue large amounts of tokens in a short period of time, rate limiting is a good precautionary measure to strengthen smart contract security.

4. Balance Limit

Balance limits reduce smart contract risk by limiting the total amount of ETH that can be locked in a single smart contract.

The balance limit will monitor the balance of funds held in the smart contract. Once the threshold is reached, the mechanism triggers an automatic rejection of subsequent payments.

If you are launching a new smart contract, balance limits can be a good preventive security measure until you are confident in the security of the contract.

5. Design a secure access control mechanism

The access control mechanism determines who can manage and change certain elements of the contract, and it is a critical path of your Ethereum smart contract architecture.

If the wrong people gain ownership or management access, they can reprogram the contract to execute malicious transactions.

To prevent the wrong person from gaining administrative privileges, ensure that sensitive functions require multiple levels of authorization to gain access.

In Cyphershield we also offer an Ethereum smart contract audit. Secure your Ethereum smart contract with a thorough audit that will find all the potential flaws, simplify the code, raise security issues, and provide improvement suggestions.