### Erstwhile * **Smart Contracts** : a decentralized way to enforce digital agreements * **Ethereum** : a blockchain-based Turing complete application platform * Bugs can be (and have been) exploited: hundreds million USD lost

### Ethereum Nodes : * Store account balances, contract code and variables * Execute smart contracts code on request * Maintain a shared view of the global state

Powerful but tricky

### Ethereum Security Challenges : * Decentralized execution environment * New software stack * Very limited ability to patch contracts * Anonymous financially motivated attackers * Rapid pace of development * Suboptimal high-level language

### Classification of issues in Solidity code : * **Security** : directly lead to exploits (re-entrancy) * **Functional**: violate the intended functionality1 (locked money) * **Operational** : lead to run-time problems (costly loop) * **Developmental** : make code hard to improve

### Locked money * Contracts that receive ether should have a way to withdraw it: call transfer, send, or call.value * Otherwise money is stuck in contract forever * In which situation money cannot be recovered? * Money locked in <a href="https://etherscan.io/address/0x0000000000000000000000000000000000000000" target="_blank">zero address</a>

### Costly loop * Ethereum users pay for contract execution with gas * Tx’s are atomic: if one step fails, whole tx fails * Miners enforce a block gas limit (hence, a limit on computation in one tx) * A costly function called inside a long enough loop exceeds block gas limit: tx is never confirmed

### Example 3/3: Costly loop * Example: payouts for all winners in a game fail because of one (maliciously) failing payout ``` for(uint256 i = 0 ; i < array.length; i++) { costlyF(); } ```

The lifecycle of smart contract

Idea 💡

Client requirements

Architecture 📐

Best practices, simulations, design

Develop 💻

Foundry,Truffle,Hardhat,Visual Studio Code, Remix, MythX

Testing 🧪

Manual + unit testing,Remix plugins, CI, GitHub integration, Code complete

Deploy ⛓

Local,Ganache,Testnets

Audit 📝

Human + machine, business logic

Deploy 🔗

Mainnet

Bug Bounty Programs 🐛

Monitor, detect attacks, new vulnerabilities

### What is security audit? * An assessment of your secure development process. * The best option available to identify subtle vulnerabilities * A systematic method for assessing the quality and security of code.

### Analyze security vulnerabilities process involves: 1. Analyze specifications 1. Run tests 1. Run automated analysis tools 1. Perform manual code audit 1. Create audit report

### The limitations of an audit * Cannot replace internal quality insurance * Cannot overcome excessive complexity or poor architecture * Cannot guarantee no-bugs or vulnerabilities

### The value of audit * Systematic review * Qualitative assessment * Thorough coverage of code in scope

### The value of audit via bug-bounty * Reviews tend to be shallower * Typically identify well known standard bug classes * Rarely identify subtle logic bugs or unspecified behaviour * Requires substantial rewards and promotional effort * Might result in no review at all

### Is audit even needed * Risk? * Code Complexity?

### Before auditing 1. Documentation 1. Easy to run 1. Clean up the code 1. Run a linter 1. Run analysis tools 1. Freeze the code

### Documentation * Describe overall system and its objective * Describe what should not be possible * Lists which contracts are derived/deployed, and how they interact with another * For e.g. <a href="https://github.com/0xProject/0x-protocol-specification/blob/master/v3/v3-specification.md" target="_blank">0x specs</a>

### Easy to run * Make it easy to install and run the tests ``` # Install truffle globally $ npm install --global truffle # install local node deps $ yarn # Testing $ npm run test # windows test $ npm run wintest ```

### Clean up code * Add helpful comments * Resolve TODO/FIXME comments * Delete commented-out blocks of code

### Run analysis tools * <a href="https://github.com/crytic/rattle" target="_blank">Rattle</a> * <a href="https://github.com/consensys/mythril" target="_blank">Mythril</a> * <a href="https://github.com/trailofbits/slither" target="_blank">Slither</a> * <a href="https://github.com/consensys/surya" target="_blank">Surya</a>

### Code Freeze * A moving target cannot be audited

### Audit Report - Typically includes: - Disclaimer - Not guarantee bug free - What was audited, version - Findings - Severity: Critical, High, Low - Recommendations

### Issue Severity - **Critical**: can cost unlimited amount of users' funds - **High**: can cost limited amount of users' funds - **Low**: minor problems or better solutions

### Sample Audit Reports - <a href="https://github.com/EthereumCommonwealth/Auditing/issues/340#issuecomment-524348753" target="blank">Dai Security Audit Report</a> - <a href="https://github.com/OpenZeppelin/openzeppelin-contracts/tree/master/audit" target="blank">OpenZeppelin Security Audit Report</a> - <a href="https://github.com/w3f/polkadot-auction/blob/master/parity-audit-final.pdf" target="_blank">Polkadot sale Audit Report</a> - <a href="https://github.com/sigp/public-audits" target="_blank">Public-audits by Sigma Prime</a> - <a href="https://github.com/bokkypoobah/OneLedgerCrowdsaleContractAudit/tree/master/audit" target="_blank">One Ledger CrowdSale Audit Report</a>

### Security Tools - Static Analyzer in Remix - MythX in Remix or truffle - <a href="https://github.com/consensys/scribble" target="_blank">Scribble</a> - <a href="https://consensys.github.io/smart-contract-best-practices/security-tools/" target="_blank">Security Tools</a>

### Manual Audit Automatic analysis tools is not reliable, give false positive and miss finding issues; manual auditing is still required

### Useful Checklists and References - <a href="https://consensys.github.io/smart-contract-best-practices/recommendations/" target="_blank">Consensys Security Best Practices</a> - <a href="https://swcregistry.io" target="_blank">Smart Contract Weakness Classification</a> - <a href="https://blog.sigmaprime.io/solidity-security.html" target="_blank">Solidity Security: known attack vectors and fixes</a> - <a href="https://github.com/ethereum/wiki/wiki/Safety" target="_blank">Ethereum Safety Wiki</a> - <a href="https://medium.com/hashex-blog/how-to-perform-your-first-smart-contract-audit-3d6883f44924" target="_blank">Smart contract security audit</a> - <a href="https://blockgeeks.com/guides/audit-smart-contract/#_The_Steps_for_a_Full_Smart_Contract_Audit" target="_blank">Blockgeeks Security Audit Checklists</a> - <a href="https://ethernaut.openzeppelin.com/level/0xdf51a9e8ce57e7787e4a27dd19880fd7106b9a5c" target="_blank">Ethernaut Contract Hacking Game</a>

### Check for Warnings - Any compiler or analysis tool warnings? - Warnings could be - false positive - bug - `==` should be `=` <img src="./warning.png"></img>

### Testing - Any test failures? - Any function missing tests?

### Code Currency - Use latest solidity compiler? - may have patches for security risks - solidity v0.6.0 changes - array.length-- is not allowed - <a href="https://swcregistry.io/docs/SWC-119#tokensalesol" target="_blank">state variable shadowing</a> not allowed

### External Calls - Is there any state changes after external calls? - Is <a href="https://solidity.readthedocs.io/en/v0.6.4/security-considerations.html#use-the-checks-effects-interactions-pattern" target="_blank">Checks-Effects-Interactions</a> pattern used to avoid re-entrancy issue? - Are errors in external calls <a href="https://www.dasp.co/#item-4" target="_blank">handled properly</a>?

### Denial of Service (DoS) - Do external calls <a href="https://github.com/ethereum/wiki/wiki/Safety#favor-pull-over-push-for-external-calls" target="_blank">favor push over pull</a>? - push: 2 accounts, A pushes to B - pull: 1 account, A pulls from contract - Is <a href="https://medium.com/@jgm.orinoco/why-use-the-withdrawal-pattern-d5255921ca2a" target="_blank">withdrawal</a> pattern being used?

### DoS With Block Gas Limit - Cost of function execution exceeds block gas limit - <a href="https://swcregistry.io/docs/SWC-128#dos_numbersol" target="_blank">Here</a> is an example of modifying large array leads to denial of service attack

### Permission - Functions should have proper permission checking to ensure only the authorized can run the functions - <a href="https://swcregistry.io/docs/SWC-106" target="_blank">Unprotected selfdestruct</a> ``` function kill() public { selfdestruct(msg.sender); } ```

### Failure Handling - Can the contract <a href="https://github.com/ethereum/wiki/wiki/Safety#circuit-breakers-pause-contract-functionality" target="_blank">pause operation</a>? - Can malicious actions be <a href="https://github.com/ethereum/wiki/wiki/Safety#speed-bumps-delay-contract-actions" target="_blank">delayed</a>? - How are fund at risk managed? - Can broken contract be <a href="https://github.com/ethereum/wiki/wiki/Safety#upgrading-broken-contracts" target="_blank">upgraded</a>? - Are users given grace period to upgrade?

### Front Running - Is there <a href="https://consensys.github.io/smart-contract-best-practices/known_attacks/#front-running" target="_blank">transaction ordering dependence</a>? - Insertion attack: ERC20 Approve/TransferFrom - changing approval from 5 to 3 may result in 8 (5 + 3) tokens transfered - work around by approving 5, then 0, then 3

### Overflow - Is there integer wraparound issue? - When arithmetic reaches bound, it wraps - uint8(255) + uint8(1) == 0 - uint8(0) - uint8(1) == 255

### Division - Is there division by zero? - EVM will revert - Is there <a href="https://github.com/ethereum/wiki/wiki/Safety#beware-rounding-with-integer-division" target="_blank">rounding</a> issue?

### Delegate Calls - Is the context used properly? - Will the call cause <a href="https://ethernaut.openzeppelin.com/level/0x68756ad5e1039e4f3b895cfaa16a3a79a5a73c59" target="_blank">change of control</a>?

### Unexpected Contract Balance - Any strict assumption of contract balance? - Ether can be <a href="https://consensys.github.io/smart-contract-best-practices/known_attacks/#forcibly-sending-ether-to-a-contract" target="_blank">forced sent to a contract</a> - Contract can be pre-funded with ether - Attack on this <a href="https://gist.github.com/vasa-develop/415a17c709d804a4d351485cd1b7c981#file-ethergame-sol" target="_blank">example</a> can make claimReward() to always fail

### Smart Contract Security Challenge * <a href="https://ethernaut.openzeppelin.com/" target="_blank">Ethernaut</a> * <a href="https://capturetheether.com/challenges/" target="_blank">Capture the Ether</a> * <a href="https://www.damnvulnerabledefi.xyz/" target="_blank">Damn Vulnerable DeFi</a> * <a href="https://cryptohack.org/challenges/">Cryptohack challenges</a> * <a href="https://etherhack.positive.com/#/">Etherhack</a>

### Smart Contract security audit reports * [MixBytes](https://mixbytes.io/) * [sigma prime](https://github.com/sigp/public-audits) * [Consensys deligence](https://consensys.net/diligence/audits/) * [Open zeppelin](https://blog.openzeppelin.com/security-audits/) * [Trail of bits](https://github.com/trailofbits/publications) * [Quantstamp](https://quantstamp.com/audits) * [SmartDec](https://blog.smartdec.net/) * [Peckshield](https://github.com/peckshield/publications)

Recommended Readings

• Examples of solidity security issues
• Smart contract Weakness classification
• Consensys smart contract best practices
• Solidity cheat sheet

## Development Guidelines * [Token integration checklist](https://github.com/crytic/building-secure-contracts/blob/master/development-guidelines/token_integration.md) * [Incident Response Recommendations](https://github.com/crytic/building-secure-contracts/blob/master/development-guidelines/incident_response.md) * [Secure development workflow](https://github.com/crytic/building-secure-contracts/blob/master/development-guidelines/workflow.md) * [The Dangers of Token Integration](https://youtu.be/6GaCt_lM_ak) * [Onward with Smart Contract Security](https://www.youtube.com/live/RipXdV7vygs?feature=share)

## Auditing guidelines * [Smart Contract Security Verification Standard](https://github.com/securing/SCSVS)

## References * [What is sc audit?](https://quantstamp.com/blog/what-is-a-smart-contract-audit)

### Bounty Program - Used to get community to audit code - <a href="https://consensys.github.io/smart-contract-best-practices/bug_bounty_list" target="_blank">Consensys Bug Bounty List</a> - <a href="https://bounty.ethereum.org" target="_blank">Ethereum Bounty Program</a>

### Readings on Parity Bug - <a href="https://etherscan.io/address/0x863df6bfa4469f3ead0be8f9f2aae51c91a907b4#code" target="_blank">Parity Multisig Wallet Source Code</a> - <a href="https://medium.com/@q3693735/parity-bug-c67ecd500347" target="_blank">Parity Bug Explanation</a> - <a href="https://ethereum.stackexchange.com/questions/30128/explanation-of-parity-library-suicide" target="_blank">Parity Bug Stack Exchange Explanation</a>