Risk Assessments for Smart Contracts and Holistic Web3: Why Ongoing Verification Is Important After First Audits

The Web3 ecosystem has seen explosive growth, transforming industries globally through decentralized apps and smart contracts. While these innovations bring vast opportunities, they also introduce new and evolving risks.

Ensuring smart contracts remain secure and compliant is not a one-time exercise. For companies operating in Web3, the risk environment demands a dynamic approach. Initial audits are essential but insufficient. Ongoing verification is key to maintaining security, compliance, and operational resilience as threats and technologies evolve.

The Smart Contract and Web3 Environment: A Changing Danger

Web3 is redefining our relationship with digital assets and decentralized financial tools. Built on blockchain technology, it promises transparency, decentralization, and trust—but also comes with its own vulnerabilities:

• Smart contracts, the backbone of Web3, are self-executing code on the blockchain.
• They are vulnerable to:
• Reentrancy attacks
• Logic errors
• Exploits from outdated or poorly written code

A one-time audit before deployment cannot safeguard against evolving threats. Continuous monitoring and assessment are necessary to identify vulnerabilities as they arise.

Why First Audits Are Insufficient

Initial audits identify common vulnerabilities, such as:

• Gas inefficiencies
• Unauthorized access points
• Reentrancy issues

But they offer only a snapshot in time. Smart contracts, once deployed, are often immutable, and cannot be changed easily—making them a long-term risk if not continuously reviewed.

The landscape changes rapidly:

• New attack vectors emerge frequently
• Best practices evolve
• Regulatory expectations shift

Even well-audited contracts can become dangerous if left unchecked.

The Requirement for Constant Verification

To stay secure and compliant in the long term, Web3 projects must adopt continuous verification practices. These should include:

• Regular vulnerability scans
• Real-time monitoring
• Adapting to new security tools and regulatory changes

Why It Matters:

• Evolving Threats: Attack methods grow more sophisticated daily
• Regulatory & Technical Change: Compliance requirements and tooling are in flux
• Smart Contract Integrity: Many contracts rely on upgradeable or external modules
• Operational Vigilance: Real-time risks like flash loan attacks and front-running demand active monitoring

Practical Methods for Continuous Verification

A modern, holistic approach blends automation and expert review:

1. Automated Security Scanning

Continuously checks for known vulnerabilities. Provides real-time alerts and preemptive detection.

2. Manual Code Audits

Conducted by professionals to catch logic flaws and architectural weaknesses missed by automation.

3. Real-Time Monitoring

Tracks:

• Unusual gas usage
• Transaction anomalies
• On-chain behavior suggestive of exploits

4. Penetration Testing

Simulates real-world attack scenarios to identify high-impact vulnerabilities.

5. Incident Response Planning

Ensure a playbook is in place for:

• Responding to breaches
• Notifying stakeholders
• Timely remediation

Conclusion

Continuous verification is not optional—it's foundational. As smart contracts underpin more of the digital economy, the risks of stagnation increase. Initial audits serve as a baseline; only a proactive, evolving security posture can ensure trust and resilience.

Continuous verification enables teams to:

• Detect and respond to emerging threats
• Maintain compliance with evolving regulations
• Strengthen operational defenses
• Build lasting trust with users and stakeholders

Explore How Bitpulse Can Help

Bitpulse helps teams maintain SOC 2 and RPAA compliance through automation and structured documentation. Learn more about our continuous verification and audit readiness solutions.

 

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• SOC 2 for SaaS: Building Trust with Customers and Regulators
• Automation in Compliance: The Bitpulse Approach
• Canadian Cybersecurity Regulations: What Businesses Need to Know About FINTRAC and Cyber Risk Compliance