A smart contract security audit is basically identifying vulnerabilities in a project’s code and fixing them using various methods or tools as the reviewing company sees fit.
The idea is to ensure that there are no mistakes that could compromise the safety of platform users’ funds.
In addition to ensuring the security of assets on the Ethereum network, where most DeFi protocols run, while also ensuring the normal operation of their blockchain systems, more relevant benefits of security audits are becoming more and more apparent today.
separate the chaff from the wheat
Over time, business in the crypto space has undergone some subtle but fundamental changes. Gone are the days when everyone could start a crypto project plan and implement it. Of course, this starts with an initial coin offering (ICO).
The intent of this blockchain-based financing mechanism is groundbreaking. But the sheer number of scam projects it spawned in 2017 was so shocking that a Satis Group survey showed that around 80 percent of crypto projects at the time were scams. Over time, although the numbers seem to have decreased, there have been continued reports of repeated scams.
Americans lost more than $80 million to crypto-related scams in the fall of 2019 and the ensuing 12-month period, the report said. Earlier in 2022, as seen in the 2022 Crypto Crime Report by blockchain data firm Chainalysis, scammers stole $14 billion worth of cryptocurrency from investors in 2021, the year 2020 Double the $7.8 billion and “carpet pulling” (a new form of scam common in decentralized finance (DeFi) where developers of crypto projects disappear with users’ funds) is key.
Therefore, be aware that fraudulent projects rarely conduct security audits of their smart contracts.
Real projects are being inspired
Ensuring that the security of the platform is in a tighter state – free from attack, risk-free, and protecting the value of transactions or stores has become somewhat of a norm. Flaws in smart contract code were highlighted as the main reason why most DeFi protocols have been hacked.
As said before, just a project website, a (not so good) well-crafted white paper, and a few profile images of known faces in the industry are no longer enough to save blockchain projects today. Instead, there has to be more about the project’s claim to existing problems, use cases, team profiles, and the community (including consultants) built around it.
There is also now a focus on the security of the platform and how its systems can be strengthened to provide investors and users with a sense of security. Auditing helps determine what needs to be done to get the right balance for all stakeholders.
Even many potential investors are moving away from chasing projects that can turn their earnings around overnight, but instead chasing projects worthy of their approval.
Credibility of Partnership Opportunities
Since new, serious projects cannot operate in isolation, they must rely on partners with other forward-looking initiatives, especially those that have been around for quite some time. This collaboration, which can span all aspects, is often designed to help them market their ideas faster and be recognized in the fields they offer. To be able to cross this bridge, they must continually demonstrate some form of credible stance, build trust in their efforts to open the agenda through a carefully planned roadmap, and follow it carefully.
This is why it is always recommended that either party to such a partnership conduct serious due diligence at an early stage. It helps determine each other’s trustworthiness and summarizes how most trustworthiness issues that may arise over time were resolved at the outset. It increases confidence in the project’s ability, not only to succeed, but to remain well-positioned in the industry over the long term.
With security audits, there is a good chance that these credit issues will be resolved. It helps illustrate the capabilities of real projects that have started to succeed with the use cases they propose, build a team to implement the idea, and take months (if not years) to get to the top.
If it’s about a token sale, questions about the project’s code audit will definitely be raised. In some cases, potential partners will insist on an audit.
Reputation is the core. No matter how unusual this requirement may seem, code audits are for mutual benefit, as credibility increases the potential of all parties in the public eye.
This aspect is still developing: but in some cases, in addition to ongoing security audits, some potential collaborative projects may need to know and have documents from the country of incorporation of the current crypto project’s legal entity/company. Other pioneering projects that want to work with you may want to have proof of project registration to ensure their legitimacy.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/why-is-smart-contract-code-auditing-critical-to-blockchain-projects/
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