Unlike traditional finance, within the DeFi ecosystem, there are no centralized intermediaries ensuring transactions are validated and accounted for. Instead, DeFi utilizes a multitude of smart contracts, which create a trustless environment for its users.
So what are smart contracts, and how can an entire blockchain ecosystem run off them? A crypto smart contract is a type of self-executing contract with the terms of the agreement between the parties being directly written into lines of code.
Stored on the blockchain, smart contracts are integral to the success of crypto projects. In fact, a decentralized finance agreement relies completely on a comprehensive smart contract. Audits can help prevent loss to all the parties in a contract.
Many are surprised to learn that smart contracts were first proposed by Nick Szabo in 1994 as a way to enable the secure and efficient exchange of anything of value without the need for intermediaries.
Of course, we all know about them these days as they have gained particular attention in the crypto world. They offer a way to facilitate transactions on the blockchain in a transparent, secure, and highly efficient manner.
Crypto smart contracts are used to automate a wide range of financial transactions, such as the lending and borrowing of assets, the issuance of new tokens, and the creation of decentralized exchanges. They are also used to prevent the transfer of assets for a specific time period.
Many smart contracts for prominent protocols are entirely open-source on Github, allowing users to individually inspect the code they are trusting. With an experienced team, users are able to do their own research and review the smart contract terms.
Even with the open-source nature of many contracts, the average layman simply cannot efficiently analyze, dissect and test a comprehensive smart contract for potential bugs or exploits. This is where smart contract audit companies step in.
A smart contract auditing company will perform a deep dive into the security of the smart contract code within a specific protocol. Their goal is to ensure that there are no security issues and that each smart contract is free from potential bugs and exploits.
Smart contract auditing firms must be external auditors, with a specialist focus on blockchain technology. Formal verification also stands to provide credibility to the blockchain projects in question, assuming they pass their security audit.
Remember, as smart contracts are often open-source, malicious actors with deep smart contract knowledge can attempt to exploit a bug or issue within the code to their own benefit.
Even without bad actors, any mistakes or inconsistencies in the code could lead to incorrect or unintended outcomes. These risks can result in digital assets being stolen, lost, or locked up on the blockchain, causing crypto investors significant losses.
One way to audit and test smart contracts is to review the code and the algorithms that are used in the contract manually. A smart contract auditor would simply read and analyze the contract code. More advanced audits would use automated tools and techniques to detect and even correct errors.
Another way to audit and test smart contracts is to simulate and execute the contract in a test environment. This can help to identify any issues or problems that may arise later and can provide valuable insights into the performance and reliability of the smart contract before it is implemented.
Once a smart contract is in force, smart contract auditors can test it to ensure that it is functioning as expected. This often involves deploying the contract on a blockchain network and conducting transactions with real users, to verify that the contract behaves as intended.
By using a combination of manual and automated techniques, and by conducting tests in different environments and with different data, you can verify the correctness and integrity of your smart contract and improve its performance and reliability.
Cybersecurity experts and the ethical hacker community are also key players in auditing smart contracts. These community players actively look for ways to improve contracts. They often provide verification services for free in order to protect the community or win bounties offered by contract creators.
Smart contract auditing is a specialized field, and there are many firms that offer smart contract auditing services to businesses and organizations. The smart contract auditing companies that we've listed below have a reputation for providing high-quality smart contract audit services to their clients.
We've also confirmed that they have a proven track record of success. If you are looking to ensure your smart contract security is on point, we think you'll be in good hands by having one of these businesses verify the accuracy and reliability of your blockchain contracts.
Founded by Richard Ma and Steven Stewart in 2017, the QuantStamp platform is focused on auditing Ethereum smart contracts for issues or potential bugs. Having secured over $200bn through their audits, QuantStamp is one of, if not the biggest, smart contract audit companies.
The company's mission is to make smart contracts secure and reliable and to help businesses and organizations use smart contracts safely and effectively. Their impressive audit list includes Ethereum 2.0, Solana, Binance Smart Chain, and even OpenSea.
QuantStamp not only exposes weaknesses within a system but also takes strides to help solve the problem. In addition to its auditing services, QuantStamp also offers training and education programs for businesses and developers who are interested in using smart contracts.
You can apply for your own QuantStamp security audits here.
Trail of Bits is a cybersecurity company that provides a range of services to businesses and organizations, including smart contract auditing. The company has a team of the best smart contract auditors who use manual and automated techniques to review and test smart contracts, and to identify any potential errors or vulnerabilities.
They promise to answer questions such as:
Similar to QuantStamp, ToB goes beyond security assessments, creating market-leading tools to fix any problems, with expertise in the Solidity language and Ethereum Virtual Machine, they can truly help you find smart contract vulnerabilities and, with their audit report, help you to fix them.
Moving on, OpenZeppelin is another go-to company for smart contract security audits, helping some of the most significant projects such as Ethereum, Compound, Coinbase, and Brave.
Their expert team provides private security reports highlighting problems within the code partnered with actionable solutions to keep their smart contracts safe from malicious actors. A perfect case study is their audit on Brave (BAT) and their smart contracts, which you can find here.
The founder of Brave, Brendan Eich, was quoted as saying: “I have a very high opinion of the OpenZeppelin team and their work.”
Consensys is another highly sought-after smart contract audit company with over $25bn in secured assets from their smart contract audits. Their Ethereum audit service provides value to even the smallest startups, up to the largest protocols within the crypto-sphere.
Already auditing over 100 different companies, Consensys helps scrutinize and test every line of code within your smart contracts by manually double-checking code. Their APIs provide semi-automated continuous smart-contract verification while you write.
Trusted by the likes of Horizon and AAVE, Consensys is one of the market-leading crypto auditing firms.
Performing smart contract security audits for the likes of Sandbox, CertiK is another dominant smart contract audit company within the industry, boasting over 1,800 audits.
Recommended by the likes of Binance and Huobi, CertiK has garnered such a reputation through their 5 step audit process.
The company uses a proprietary technology called Formal Verification, which uses mathematical proofs to verify the accuracy and reliability of audited smart contracts.
This helps to identify and correct any errors or vulnerabilities in the contract, and to ensure that it behaves as intended. CertiK's audit reports reveal issues and even suggest possible solutions.
Their core team of expert reviewers has audited some of the most prestigious projects in the crypto sphere, such as USDT and AAVE, pushing crypto forward as a reputable asset class.
The penultimate smart contract audit company is Least Authority, helping the likes of Ethereum and Filecoin to improve their security. Their services stretch from penetration testing to source code edits, defense deployment, and even helping build decentralized systems for projects.
Like most companies already listed, Least Authority goes further than simple issue identification. Their core focus is the troubleshooting phase, where they help projects fix the identified problems in their blockchain projects.
Although a lesser-known company compared to the market leaders mentioned before, Least Authorities' expert auditing team produces in-depth reports about each audited blockchain project.
The last smart contract audit company is Runtime Verification, explicitly aimed toward blockchain solutions and decentralized applications built around Ethereum and ERC-20 tokens.
They offer various security services to validate and audit different crypto projects. The entire logic behind their auditing originates from the K Semantic Framework.
For example, they offer both smart contract verification and ERC20 token verification for a complete top-to-bottom audit of an entire protocol. Token verifications ensure a project's token fully complies with the ERC20 standard and functions correctly on the mainnet.
Runtime Verification boasts many of the most prestigious crypto-projects as partners or customers, such as Algofi, Cosmos, Uniswap, the Web3 Foundation, and many more.
One of the key advantages of blockchain smart contracts is that they are decentralized and transparent. Because they are stored on a blockchain network, they can be accessed and verified by anyone who has the necessary permissions.
This means that there is no need for a central authority or intermediary to enforce the contract, and the terms of the contract are transparent and visible to all parties involved. It also means that you need a smart contract auditor to review the smart contract code before you sync it to your wallet address.
Overall, blockchain smart contracts are an exciting technology because they offer many benefits and advantages over traditional contracts. They are decentralized, transparent, immutable, and efficient, and can enable faster, cheaper, and more secure transactions and agreements.
While smart contract audits may appear dull at first appearance, they are the key to making cryptocurrencies a trusted asset class. Your favorite projects may not exist without such companies, as some of the worst smart contract exploits have been prevented by smart contract audits implemented by some of the best smart contract auditing companies listed above.