Smart contract security guide for beginners from Gamdom

A smart contract is designed to operate autonomously and efficiently within programmed parameters to serve its purpose. Thus, it’s ideal that it should be something that you can leave alone while spending time and resources on other matters. That’s why you have to ensure it is safe and there are many ways to ensure that. 

Identifying smart contract vulnerabilities can go a long way to running a safe project. To do that, you must first be familiar with how they work. Here’s Gamdom’s quick guide to smart contracts that can give you a quick rundown of the important details:

What is a smart contract?

A smart contract is a programmable, self-executing contract made on a blockchain like Ethereum (ETH) and Solana (MATIC). It automatically operates as it is programmed and then changes only if it’s coded to do so after meeting a predetermined condition(s).

You can think of a smart contract as similar to a written contract between two or more parties that always involves a neutral party who oversees its completion. What happens next depends solely on whether or not everyone involved completes their end of the agreement. That’s also how smart contracts work except the neutral party in its case is the contract itself. 

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How smart contract works

Smart contracts are built on a blockchain, powered by the network’s algorithm and processing power. The typical cycle runs in the following order:

• Creation of the smart contract
• Deployment on the blockchain, making it immutable
• Triggering set conditions based on data gathered on the network
• Execution of the pre-programmed command after meeting trigger conditions
• The network’s validation of the smart contract’s intended action
• Result of the executed action as per instructions 

Despite their efficiency and automation, the main concern for security lies in this simple process with many points for error. Smart contract vulnerabilities exploited at any stage of this process lead to a bad outcome for the parties involved. That includes a poorly timed execution or funds being distributed to the wrong address.

Potential smart contract vulnerabilities

Vulnerabilities refer to potential weak points in smart contract security. They can either be exploited by a malicious party or cause an error in how it works. If you want to have the safest transaction, then this smart contract guide to possible vulnerabilities will help you know what to look for.

Timestamp dependence 

Certain blockchains use different metrics to determine the order of action and timestamp is one of the riskiest. It can be easily manipulated, allowing bad actors to ruin the order of execution or timing of commands. All it takes to manipulate this is to withhold data or feed them on the smart contract too early, making the smart contract think that the conditions aren’t met properly. 

The best way to avoid timestamp dependency is to use a different system. The best alternative that is still cost- and time-efficient is block number dependency which moves one at a time and is harder to manipulate. Alternatively, you can insist on using timestamp but allow increments of 1 to 900 seconds. It makes it harder for manipulative data to impact the smart contract.

Reentrancy attack vectors

Reentrancy refers to causing the trigger to happen multiple times, allowing certain parties to re-execute the smart contract’s commands. This is potentially harmful if the action is to transfer funds because this can allow bad actors to steal the smart contract's assets. The easiest solution is setting limits on how many times a trigger should occur and implementing lock mechanisms can help mitigate this vulnerability effectively. 

Unchecked external calls

Oracles are digital assets used for smart contracts to gather information from a different blockchain. It allows cross-chain interaction between parties which enables more flexible agreements to be made. 

However, oracles can misread data or be vulnerable to manipulation depending on the service provider’s credibility. It’s best that you only trust reputable ones like Chainlink (LINK), DOS Network (DOS), and Band Protocol (BAND) to avoid security concerns.

Transaction manipulation

Manipulating transactions or griefing can involve many kinds of actions and here are some examples. 

• Frontrunning – It is one of the most common examples which involves exploiting how transactions work in blockchain technology. This artificially raises processing activities on the network, thereby slowing down larger transactions and raising gas fees or reducing token prices. Frontrunning used this way actively manipulates market trends.
• Denial of Service – Similar to frontrunning, this involves flooding the network with actions to exhaust its resources. This can lead to delays in liquidity or increased gas fees to a level that most users aren’t willing to pay for, halting their operations. 
• Sybil Attacks – Some smart contracts are needed to handle voting in a dApp or blockchain. However, bad actors can create fake accounts (Sybil accounts) to manipulate the vote count. One quick solution to this is to make votes leverage on proof-of-stake (PoS) rather than headcount. 

Integer overflow/underflow

Smart contracts use algorithms to determine their actions at all stages of their cycle. However, this is vulnerable to data manipulation such as artificially overflowing/underflowing of integers, disrupting how smart contracts behave. The best way to address this is to either use fixed-sized data or set limits to the input. 

Unprotected ownership

The best way to prevent anyone from manipulating your smart contract is to make it available strictly to the owner. Doing so limits who can input data or prevent anyone from force-feeding it. However, ownership can be left unprotected like failing to set clear conditions on whom to identify as parties involved. Bad actors can claim it and block you from accessing it in turn. 

Put security on top of your smart contract priorities 

The best practice in smart contract security is to understand how it works and what its potential vulnerabilities are. You can address these matters more gracefully the more you understand. Knowing also helps you learn which smart contract security tools should be used and which one among the technologies available today are best suited for your needs. 

Keep your smart contracts safe and secure. Never let it run while vulnerable to bad actors because the crypto industry is a growing economy where everyone wants a piece of the profit. All assets you earned from hard work are yours to use, not for anyone else, whether it’s from trading or winnings you earned from betting at Gamdom. 

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