5 Smart Contract Security Issues and How to Avoid Them

Smart contracts are revolutionising the way businesses operate. By automating complex processes, they are making it easier for companies to conduct transactions without the need for a third party. However, with great power comes great responsibility. Smart contracts are vulnerable to a wide range of security issues, which if exploited could cause serious financial damage to businesses. In this blog post, we will discuss the most common smart contract security audit issues and how you can avoid them.

5 smart contract security issues

Blockchain may be secure but smart contracts make them vulnerable. This is because, in the end, smart contracts are nothing but programs and as with the case of any other program, they are subject to bugs. Here are some of the most common smart contract security issues:

Indirect execution of unknown code:

This security issue arises when a smart contract calls another smart contract that contains malicious code. The result is that the original contract can be executed without the knowledge or consent of the owner. To avoid this, thoroughly examine the code or libraries your smart contracts rely on.

Redundant entries:

A redundant entry is an extra copy of data that is stored in a blockchain. This can happen when a user accidentally makes duplicate transactions or when a smart contract fails to update its internal state correctly. Redundant entries can lead to confusion and errors, so it is important to keep track of all the data that your smart contracts rely on.

Miscalculations with the output token amount:

This security issue occurs when a smart contract calculates an incorrect token amount as a result of a mistake in the code. This can have serious consequences for businesses that rely on these contracts to conduct transactions. To prevent this, it is important to test your smart contracts thoroughly before releasing them into the wild.

Dependency on the order of transaction execution:

This security issue arises when the order of transactions affects the outcome of a contract. For example, if one transaction depends on the results of another, then altering the order could cause the contract to malfunction. To avoid this, make sure your smart contract functions manage the sequence of transactions correctly.

Incorrectly handling exceptions:

Exceptions are errors that occur during program execution. Smart contracts may exhibit unintended behaviour that could lead to serious losses if they are not handled correctly. To avoid this, it is important to test your smart contracts for exceptions and to handle them correctly.

How to prevent smart contract security issues?

The best way to prevent smart contract security issues is to use a combination of static code analysis and penetration testing.

Static code analysis:

This is a testing process of reviewing code without actually executing it. This can help you to find coding errors and bugs as and when you are developing your smart contract.

Penetration testing:

Penetration testing is a process of trying to attack your system in order to find weaknesses. This can help you to identify potential security issues that may arise after your smart contract has been deployed.

By using these two methods, you can significantly reduce the risk of smart contract security issues. However, it is important to remember that no system is perfect and that there will always be some risks involved. Therefore, it is important to keep your contracts updated and tested regularly.

How can pen testing help in protecting smart contracts?
By using penetration testing, you can gain a better understanding of how an attacker might view your smart contract and use it to manipulate transactions. This can help you to identify and fix potential vulnerabilities before they are discovered by malicious actors.
Penetration testing can also help you to understand how your contract handles errors and exceptions. This information can help you to improve the robustness of your contract and reduce the risk of it crashing or malfunctioning.

Conclusion

Smart contracts are relatively new and they're still evolving. Securing them is still a challenge, but by using static code analysis and penetration testing, you can significantly reduce the risk of your contract being compromised.
However, it is important to remember that no system is perfect and that there will always be some risks involved. Therefore, it is important to keep your smart contracts tested regularly to ensure that they remain secure.