Smart contracts are propelling the blockchain sector to greater heights, with new solutions being developed as time goes on. They power everything from decentralized exchanges to gaming apps to supply chain management. These protocols manage a massive amount of data and digital assets, which, unfortunately, makes them a prime target for hackers.
Security is as critical as ever to programmers building smart protocols. This article will explain what you should know about building secure protocols.
What is smart contract security?
It refers to the measures and methods to protect blockchain contracts from malicious attacks. It involves designing protocols to prevent security vulnerabilities at every stage and ensure the protocol delivers its planned functionality.
Security is crucial because hackers often target blockchain protocols to steal funds and valuable data. Hundreds of millions of dollars worth of digital assets are stolen annually because of contract vulnerabilities, causing mayhem for their owners. Anyone developing blockchain protocols must pay attention to digital security or face the consequences of negligence.
Designing a secure smart contract
Securing a blockchain protocol starts from the design stage. Developers must design the system thoughtfully and avoid trivial mistakes that malicious actors could exploit. A hacker needs just a single opening to exploit the system, and you shouldn’t give them any.
Your contract should follow a robust and precise logic. Think deeply about what you want to achieve and the logical steps it takes to do it. Consider the edge cases your system might face and how you would counter these cases.
For example, when designing a decentralized exchange, a developer must consider “slippage,” which is the difference between the expected price of a trade and the actual price at which it executes. In this case, the developer must implement a slippage control mechanism to prevent large trades from incurring massive slippages.
Common blockchain protocol vulnerabilities
Here are some common vulnerabilities affecting automated contracts:
- Integer Overflow and Underflow: When the contract can not process a transaction because the numbers involved are too large (overflow) or too small (underflow).
- Data exposure: An opening that leaks sensitive transaction information to external parties.
- Frontrunning: When a malicious actor can monitor and act on transactions before the blockchain confirms them.
- Timestamp dependence: When the contract relies on the timestamp value of a block to execute certain actions. A malicious actor can exploit this vulnerability to manipulate the contract.
- Access control: Errors in the code governing access control can lead to unauthorized access.
Best practices for secure protocol development
1. Seek an audit
Auditing involves blockchain professionals reviewing every aspect of your smart contract to identify and detect vulnerabilities before public deployment. A smart contract security audit is necessary, or you risk releasing a protocol with many vulnerabilities awaiting exploitation.
Always find an independent auditor to review your project before deploying it on the blockchain.
2. Be careful about third-party integration
Your protocol might be safe, but a third-party integration can introduce vulnerabilities you don’t know about. Always handle third-party integrations carefully, ensuring you work with only tried and trusted tools.
3. Transaction fee optimization
Optimize your code to execute transactions with the lowest possible transaction fees. This action reduces the risks of malicious actors exploiting transaction fees to steal funds. It also helps users save money, which makes them like your protocol more.
4. Follow industry security standards
Many auditing firms have released free checklists for developers to evaluate the safety of their contracts before deploying them. You can search for these checklists and ensure you comply with them while writing the code for your protocol.
We have briefly explained blockchain protocol security, the common vulnerabilities you might encounter, and the best practices for designing a secure protocol. Follow our tips, and you’ll likely design a safe contract and avoid problems with users.