Demystifying the Security Audit — Why and When Your Crypto Project Needs One.
Building a product in the fast-moving crypto sector is really tough. Founders have a lot on their plate just trying to launch and scale their business, on top of the serious work of managing the security of their products and code. Blockchain technologies and smart contracts provide an exceptional technology stack for innovative decentralised applications and new products/services for users, but many blockchain projects do not survive due to hacker attacks or vulnerabilities in data protocols which destroys hard earned reputations and companies. Just ask Harmony Bridge, a project that lost $1 million in a hack this summer, or Inverse Finance, which was attacked and lost $5.5 million because of a code mistake.
What happens during a security audit?
Сrypto projects conduct security audits to improve product security and ensure customers and their funds are protected. A security audit is a process conducted by a third-party audit specialist who will perform functions aimed at identifying and fixing code vulnerabilities. Auditors look for vulnerabilities to hacker attacks and unauthorized intrusions into databases. But this is only a small part of the services provided by security audit firms.
What are the parts of the Crypto security audit?
- Identification of vulnerabilities and errors in the smart contract code.
- Evaluation of code errors by levels of severity.
- Provides a report of found errors and vulnerabilities.
- Re-verify and report the smart contract code once error fixes are done.
- A final verdict on project’s level of investment security risk from a technical point of view is provided.
When do you need a security audit?
You need to conduct a security audit in these cases:
- Before the launch of the MVP or the project’s final product. The audit enables you to ensure customers’ safety and guarantee them the security of any investments.
- When launching your token on a centralized exchange (CEX), you must do an audit. Large centralized platforms have a high bar for compliance and risk management and must take care of investors’ safety and their reputation, therefore you must have completed a security audit if listing.
- When fundraising. A blockchain project must conduct a security audit to guarantee protection from hacking and theft of investors money. If the project has not been audited, then the project is not “investment attractive”, in the eyes of some investors and may be considered unsafe.
- Providing assurance to users. Hiring a trusted or known audit firm can be excellent marketing “seal of approval” and trust builder. Your project’s investment attractiveness and reputation will be positively impacted.
Is an audit necessary even during a Crypto Winter?
You may be tempted to save money and skip the security audit, especially during the Crypto Winter. This would be a critical mistake that makes your project more vulnerable to hackers. Attackers are often active during a liquidity crisis because they understand the founder’s desire to save money and hence see a potential opportunity. Many blockchain startups have been hacked due to bugs in their code that security audits could have avoided.
According to the latest data report from SlowMist, over $1 billion was stolen from DeFi protocols in the first half of 2022. These gains were derived from seven internet protocols with significant security system defects.
Over the past year, CEX crypto exchanges have lost about $100 million from hack attacks. This is a considerable amount, but this is many times less than the losses experienced in decentralized DEX exchanges and the DeFi sector.
The audit is a critically needed procedure for crypto startups during the Crypto Winter. A full review of your product for a nominal $20,000 will enable your project to save reputation and user funds for potentially millions of dollars.
What Differentiates Vidma Security Audits ?
Applicature’s portfolio company Vidma has been conducting comprehensive auditing of crypto projects since 2020. The company’s auditors conducted 131 audits for 96 clients. During the audits, 1092 errors were found, 93 of which were critical.
A wide range of services distinguishes Vidma from other audit companies. Thanks to the unique way Vidma approaches workflow and audit functions, clients receive a comprehensive analysis of the product/code/project at an affordable price. Vidma also distinguishes itself in the market of audit services by:
- Two auditors are reviewing each project. Auditors check each other’s work to exclude the possibility of missing critical errors.
- Comprehensive product/code/project testing. Developers create all tests from scratch based on specific business processes and the client’s business model.
- Vidma auditors do not include fees for code comments. Most audit firms have a price for each line of code. This forces clients to remove comments. Vidma’s experts want a complete vision of the code to form the best idea of the project’s business logic and conduct, and do not charge for this.
- Vidma has created a better audit scoring system. Vidma’s audit experts have made a gradation of errors according to their impact on the project’s functioning. There are five vulnerability types: critical, high, medium, low, and informational.
- Vidma provides advanced audit services divided into three main areas: security, operational behavior, and optimization
- Security part of the audits is aimed at analyzing the code and architecture of the smart contract and its security, and detecting potential hacking vulnerabilities.
- Operational part of the audit checks the smart contract in business process logic. Vidma auditors, in close contact with the client’s developers, analyze the smart contract structure to identify solutions that will improve or refine the mechanics of the smart contract.
- Optimization part of the audit implies specific steps to improve the smart contract architecture and optimize its operation. Vidma auditors provide clients with information on how to make the contract more secure, more gas-friendly, etc.
- Vidma will re-audit the code/product/project after providing initial audit reporting, after reviewing and eliminating vulnerabilities by the client’s team. If a re-audit reveals old vulnerabilities or new bugs, Vidma includes information and advice on how to fix them.
Crypto winter is challenging but does not skimp on getting an audit done. Protect your project from hacker attacks and vulnerabilities and be ready for the next stage in your project’s growth.
Contact a company representatives on the website to book your next audit: