Why Continuous Verification After An Audit Is Necessary with Holistic Risk Assessments for Web3 and Smart Contract Security
As Web3 solutions and decentralized finance (DeFi) applications become more common and integrated into business plans and offerings, risk assessments for smart contract and blockchain application security are more vital than ever. Decentralized applications (dApps) and smart contracts offer new efficiencies but also new business possibilities and potentially devastating risks that developers and businesses must acknowledge to maintain trust, security, and effective risk management. Should companies fail to realize the need for continuous verification after an audit, they'll easily fall into a trap of false confidence—and unnecessary risk.
This article explores the need for continuous verification beyond an audit through holistic risk assessments for Web3 and smart contract security and how a company can continue to assess and secure its systems long after their first audit exploration.
Since the Web3 transition is fundamentally decentralized, much of the security is concerning—mostly surrounding smart contracts. A smart contract is a contract that executes itself. The transaction and agreement terms between seller and buyer get placed into lines of code. It allows for trustless transactions and no intermediaries; however, poor coding or errors can leave developers and users susceptible to millions in losses and being taken advantage of.
Whereas with the standard, if coding is flawed, an entity hosting the platform with access can take time to fix it over time as needed. Web3 security is not nearly as static. Because it runs on blockchain technology, created and deployed smart contracts could become immutable. Deployed means once a contract is created, it's challenging to change its code in the future. So vulnerabilities get exploited repeatedly if not fixed.
In the early days of any Web3 or smart contract deployment, for example, companies rely on security audits to attest to the legitimacy of code. There is almost an understood expectation that a code review by security professionals will uncover known exploits, code smells, or fallacies that could compromise the legitimacy of the project. While security audits are critical to the development process, they come with expectations and limitations and fail to be effective for the long term.
Audit Limitations
One-Time Assessment
An audit is a one-time assessment and assessed for whatever code exists on the day of the audit—not the day of the deployment or changes made retrospectively post-launch.
Exploits Revealed After the Audit
Over time, the audit can become useless as new exploits arise that were not detected in the audit. Furthermore, exploits might be more relevant down the line than they were on audit day.
Smart Contract Confusion
Many are not as easily found during manual review (i.e., reentrancy exploits, gas limit problems, logic errors) and might only occur under specific circumstances after a long time.
Yet an audit is merely a snapshot in time of security for a smart contract. When projects go live, more must be done.
Continuous Verification Advantages
With a continuously changing Web3 space, a more engaged, anticipatory, and responsive security protocol is a continuous verification approach. This includes ongoing observations, continuous vulnerability testing, and audits of findings for vulnerabilities post-implementation.
New Vulnerabilities
New vulnerabilities occur all the time—from hackers seeking to find unguarded doors to data breaches to more sophisticated con artists. Smart contracts operate via immutable codes once sealed on a blockchain. A continuous verification process assesses vulnerabilities when the "door is closed" instead of waiting for real-time implementation—at which point, it may be too late.
Even with continuous verification after an initial audit, however, code and contractual functionality can still change. Whether it's an upgrade, a bug fix, or new features, adjustments to code and contractual functionality can be made that, unintentionally, introduce new vulnerabilities. With automated continuous verification with monitoring, however, developers can detect vulnerabilities as soon as they're changing, minimizing exposure to potential exploits.
Catch Problems Sooner
Where static audits can only support a snapshot in time, continuous verification creates the opportunity for continuous monitoring of smart contracts and dApps. Companies can notice anomalous transactions or unusual gas fees that could suggest a vulnerability or an exploit attempt. The sooner these issues are caught, the less chance there's a potential loss of life-changing revenue or reputation.
Increased Trust from Investors and Users
One of the most critical aspects of anyone engaging with any Web3 project is security, given the vast amounts of money all on the line. When a company seeks continuous verification for its smart contract safety and security, it raises trust levels with users and investors alike, providing transparency and acknowledgment of proper security measures in the works.
How to Implement Continuous Verification
Achieving continuous verification through the Web3 development process occurs through automated efforts with some manual verifications for directional purposes. The following processes will lead to a successful continuous verification:
Use of Automated Scanning Tools for Smart Contracts
Automated scanning of smart contracts is an ideal method for achieving continuous verification for security. Automated smart contract scanning options like MythX, Securify, and Slither can be plugged into the Web3 development pipeline. These tools offer automated analysis of smart contracts and perform ongoing assessments for vulnerabilities such as reentrancy attacks, gas inefficiencies, and best practices. By accepting such automated scanning opportunities, developers will have the ability to preempt potential exploits by scanning code for vulnerabilities before typical code finalization.
Automated Security Scanning within CI/CD
With continuous integration and continuous deployment served as best practices for adding new lines of code into existing Web3 structures, it's essential that continuous security scanning becomes a part of this process, too. Because CI/CD already exists in the Web3 development process, developers can further accept CI/CD tools that integrate automated security tools to run scans and assessments upon new code commitment and integration so verification efforts can occur without interrupting the Web3 development process.
Real-Time Threat Detection
Another option is to use real-time threat detection like Forta or OpenZeppelin Defender. These services run constant checks on-chain activity to assess whether malicious activity occurs. These projects can notify you of potential exploits, attempted hacks, or even suspicious gas fees, enabling you to mitigate the situation before access is granted or funds are put at risk.
Manual Security Audits
While a lot can be automated, some security audits should be manual. For example, relying on smart contract security automation software to catch all potential weaknesses might fail; a seasoned, third-party security auditor will spot things that might go unnoticed due to programming logic quirks. Complicated vulnerabilities and business logic errors, in particular, require human discretion. Regular third-party audits will help you feel more comfortable with your smart contract.
Bug Bounty Programs
Consider using a bug bounty program to crowdsource security with the help of the Web3 community. Bug bounty programs give ethical hackers access to your smart contracts through incentivization and allow them to report vulnerabilities before malicious actors exploit them. Use a service like Immunefi or HackerOne to host a bug bounty program and improve your chances of being made aware of exploitable gaps before anyone else does.
Final Thoughts
With the additions and protections Web3 can provide and vulnerabilities of smart contracts, new opportunities for cybersecurity breaches and protections arise nearly daily. While one might not be able to predict every quality audit vulnerability without the first comprehensive audit, Continuous Verification helps put minds at ease as security will always have an opportunity to improve.
By employing automated means of continuous verification, real-time oversight, and regular security testing, companies can assess vulnerabilities before they're used against them and ensure their smart contracts are secure. For businesses operating in the fast-paced world of Web3, continuous verification is not just an advantage over the competition—it should be standard.
Reach out to Bitpulse today to learn how our technology can allow your business to achieve continuous verification of smart contracts and obtain SOC 2 compliance. Explore our compliance automation suite to stay one step ahead of Web3 vulnerabilities.
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