Safety in crypto: how to protect your project from hacking and explosion

For the first quarter of 2022, hackers took $ 1.2 billion from Defi protocols through vulnerabilities in smart contracts. The fact that despite the fact that there are methods of protecting the DAPPS contracts from hacks and exploits – the amount of lost and withdrawn funds continues to grow. This undermines the trust among users in the cryptosphere in general and Defi in particular – they account for the lion’s share of all attacks. How to protect your project from exploit and hacking – we tell in the article

What is the difference between the exploit from hacking

The easiest way to understand is how these two types of attacks on a smart contract through an example are different. Imagine that two robberies occurred on the street. In the first case, the thieves had to find a master key from the castle, and then work to hack the safe. And in the second, the attackers simply entered the open window and found money in the drawer of the desk. The architecture of Smart contracts is complicated, so the developers sometimes accidentally leave “open windows” for hackers in it. The search for such loopholes in a smart contract is called an exploit.

There are several common causes of hacks and exploits of smart contracts.

The compromised administrator key. Smart contract claims to fully decentralize and regulates the relationship between Dapps users. But there is a limited number of administrators who have access to privileged functions. If the hacker stole the key, he will be able to get control of the smart contract and steal user funds.

Errors in a smart contract. As we wrote above, people write the code who cannot be insured from errors. There are different types of loopholes in a smart contract – sometimes it is a complex vulnerability that is not easy to detect, sometimes a simple typo in the code line. But the result of any error can be calculated in millions of dollars of stolen funds.

Errors in the logic of Smart Contract. Some projects simply copy third-party protocols due to lack of experience and knowledge. Meanwhile, the smart contract includes all the steps and actions that the user performs. And if some part of the logic of these actions is violated, then the means and data of users are threatened.

How to protect your application from attacks

Most security problems are simply solved. Below are a few steps that must be taken into account by the project managers when deploying their application or project in Defi and Web 3.0

  1. Hire an experimental team of developers. The security of the project begins with the development of a reliable smart contract. It would not seem that there are already quite ready -made solutions for expanding applications in blockchain networks – template solutions are not suitable for all projects. In addition, the creation of a smart contract is not the only difficult stage in the roadmap-it is necessary that the team be able to test the project and work with the data audit of the smart contract.
  2. Pass modular testing. The essence of the blockchain is that its data is unchanged – if errors are found after starting the application, they cannot be corrected. Therefore, it is necessary to check in advance the functionality of the smart contract in the conditions of the test network
  3. Pass an independent audit of a contract of contract. Usually it helps to identify errors in the code, find and evaluate potential vulnerabilities and check the logic of the interface. If the project is complex and is associated with large amounts of user blocked funds, it is advisable to take an audit in several accredited firms at once. The most famous auditors are Certik, Blaize, Hacken, Slowmist, Chainsulting.
  4. Ensure the safety of administrator keys. It is necessary to carefully consider the storage of closed keys and not trust them to third parties. It is better to introduce multi-factor authentication-access to a smart contract could be obtained using not one, but several keys. In this case, even if any of them is compromised, attackers will not be able to access the functions of a contract of contract.
  5. Seek help from a community or white hackers. This is an optional step, but in some cases a simple audit may not be enough. For example, for new second -level networks or multi -billion dollar defi protocols. The introduction of awards for the errors and vulnerabilities found will solve several problems at once – it will improve user experience in the application and help prevent the potential hacking of the protocol.

Many of the tips may seem obvious above, but as the statistics of crimes in the cryptosphere shows, not all protocols follow them. Explorators and hacks of contracts of contracts ultimately lead to a loss of reputation, reduce confidence in the industry and attract the attention of regulators. Therefore, it is especially important to monitor the safety measures of your project.