An Audit can give legitimacy to a project or blockchain initiative, but we advise everyone to be cautious and do their own research while investing in any protocol in DeFi.

Are Audits really 100% Safe?

Audits are always a necessity for a project to gain legitimacy towards its users, but this doesn't always mean investors are safe from risks.

What is an Audit?
A smart contract audit is a thorough, methodical inspection and analysis of the code used by a smart contract to communicate with a cryptocurrency or blockchain. This procedure is used to find bugs, problems, and security holes in the code so that we can recommend fixes and make changes. Smart contract audits are typically required because the majority of these contracts deal with money or other valuables.

Such checks are difficult because smart contracts frequently interact with one another and because any connections with external systems may leave the protocols open to attack. Due to this, the tests are frequently extended to include any other smart contracts participating in interactions, including those that those interactions entail. These checks often involve both manual code examination and the execution of tests. Large sums of money are frequently managed using smart contracts, and a single flaw or vulnerability can lead to significant losses. More specifically, all the ecosystem's assets could be lost by the users and stakeholders of the aforementioned decentralized application.

The project team is informed in advance of the auditors' suggestions, and their responses are documented in the final report. It is regarded as a symbol of the project's authenticity and integrity. Teams are eager to obtain an audit for this reason in order to boost the project's credibility and gain the trust of users.

Usually, these audits are conducted in stages.

The team's and the auditing group's agreement on the audit's parameters and scope is the first step. It indicates that the auditors are provided with information on the smart contract's architecture, design, and other specifics. The testing step follows, during which the auditors test smaller sections first, followed by larger functionalities. Additionally, automated methods for bug analysis and detection are employed to search for well-known weaknesses in the contracts. Finally, auditors manually review the code to ascertain the developer's goals and contextualize the findings. The findings and the team's implemented remedies are finally included in the report.

Audit doesn't necessarily mean safety.
An audit will never do more than check a project's technical elements. So absolutely, a smart contract might not be accessible to outsiders, thus thwarting attacks and hacks. Nothing would have been stopped by an audit if a project owner would chose to rugpull. The majority of audits are simply concerned with technical matters, and they make this point very apparent. Additionally, this is frequently quite helpful, especially if you have widely utilized smart contracts. Given that such an audit would have discovered the leaks that in the past resulted in financial loss, OpenSea might have benefited from it. Similar to this, initiatives like PancakeSwap routinely inspect their smart contracts to dispel assaults.

An Audit can give legitimacy to a project or blockchain initiative, but we advise everyone to be cautious and do their own research while investing in any protocol in DeFi. Background checks, DOXXED Teams and well written documentations can prove some projects don't have malicious intent towards their users.

Written By

Petrache Ionut

Jul 6, 2022