Smart Contracts continue to gain recognition and even venture capital funding. In fact, recent studies have shown that 61% of enterprises claimed to have plans for integrating blockchain technology into their core business procedures. However, a major problem to the adoption of Smart Contracts is wrapped around trust and lack of regulatory frameworks. There are few, if any, applicable laws to resolve disputes arising from automated business transactions.
With the increasing importance of smart contract security, audits have become one of the most common ways to secure blockchains. In the below article, we will analyze how much time takes for an audit to be completed and what it may cost.
What is a Smart Contract Audit and Why is it Important?
Smart contracts are self-executing contracts with the terms of an agreement between buyer and seller being directly written into lines of code. The code is stored, distributed, and replicated on a blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. The blockchain can be used to trace transactions and make them transparent for all parties involved.
A crypto security audit focuses on a smart contract’s source code to ensure that it is functioning as intended. Auditors use automated checks and manual reviews of the code to get an overall picture of how the contract is operating and its purpose.
The audit report is important for developers as it allows them to check for vulnerabilities in their code, which could be exploited by external actors. In that way, they can ensure that the contract cannot behave in ways that it was not meant to. It can also offer the investors and users of the contract the trust and reassurance they need to interact with the contract safely.
How Many Types of Smart Contracts are There?
Before we analyze the factors that may affect the cost and the timeframe of an audit, let’s see the 3 types of contracts that exist out there:
1. Smart Legal Contract
Smart contracts are legal agreements that are executed automatically. They have the same requirements as traditional contracts, such as mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality. When set up properly, smart contracts are legally enforceable and require parties to fulfill their obligations. If a party fails to fulfill its obligations, the contract can trigger automatic legal action against the party in breach.
2. Decentralized Autonomous Organizations
DAO stands for Decentralized Autonomous Organization and describes a community that exists on the blockchain. This community is defined by a set of agreed-upon rules coded as smart contracts, which are enforced by all participants. Each participant’s actions are subject to these rules, and the task of enforcing them is shared among all participants in the network. The rules themselves are made up of many smart contracts that work together to keep track of activities in the DAO.
3. Application Logic Contracts
Application logic contracts (ALCs) are a crucial component of multi-functional smart contracts. They enable communication across different devices and allow for the merging of IoT technology with blockchain technology.
Smart contracts possess all the qualities necessary to carry out a transaction with a high degree of precision, safety, and efficiency. Because smart contracts are written in code, however, it is not easy for everyone to create one from the scratch without having a background in computer programming.
How Much Time Does it Take For an Audit to be Completed?
As you can already tell from the various types of smart contracts out there, the timeframe that an audit needs to be completed depends on many parameters. Let’s discuss the more crucial ones below:
The first and most important factor to consider for an audit is the project’s size. For instance, if you want a simple contract of ERC20 or BEP20 tokens to get audited, then you can get the audit report just within 48 hours. However, if the token is part of a Dapp, it won’t be possible to examine the code within the same timeframe. The audit process can take up to a couple of weeks to complete it. The type of contract also plays an important role in determining how quickly your company can expect its smart contract audit results. Advanced ERC20 contracts have more features than basic ones and therefore take longer to audit than basic ones.
When determining the complexity of your project, consider how much time will be required for auditors to complete their work. The more functions and custom code a contract includes the more time is needed for the auditors to analyze it and run all the tests. Furthermore, the more external files it may use, the most complicated the line-by-line checks will be.
The audit types are usually divided into 2 main categories: the Manual and the Automatic Audit
Manual audits entail an examination of lines of code for potential vulnerabilities and programming faults. They also ensure that smart contracts are adhering to their intrinsic business logic, as well as identifying edge cases and optimizing code for gas use. Unit tests are also included as part of the manual audit process of a smart contract.
Automated auditing is a method of scanning code for defects using audit tools. It guarantees that all aspects of smart contracts are covered, leaving no room for human mistakes. The automated audit may take up to one day for ERC20/BEP20 contracts.
What is The Cost of a Smart Contract Audit?
Companies that provide smart contract audit services charge from $1,000 to $15,000 on average. However, the price can be even higher in some cases. As you can understand, the expenses of development, deployment and technical support for smart contracts can become prohibitively high. Nevertheless, smart contract auditing is always recommended, as even a single bug in code may result in even higher costs, eventually.
We hope that these insights will give you a good idea of what to expect when performing a smart contract audit. If you need a smart contract audit quote for your smart contract, feel free to send us a message at: [email protected]