What Is a Smart Contract Audit?

-A smart contract security audit examines and comments on a project's smart contract code. Typically, these contracts are written in Solidity programming language and provided via GitHub. 

-Security audits are particularly valuable for DeFi projects that expect to handle blockchain transactions worth millions of dollars or a huge amount of players.

The audits usually follow a four-step process:

1. Smart contracts are provided to the audit team for initial analysis.

2. The audit team presents their findings to the project for them to act upon.

3. The project team makes changes based on the issues found.

4. The audit team releases their final report, considering any new changes or outstanding errors.

Why Do We Need Smart Contract Audits?

-With vast amounts of value transacted through or locked in smart contracts, they become attractive targets for malicious attacks from hackers.

 Minor coding errors can lead to huge sums of money being stolen.

 For example, the DAO hack on the Ethereum blockchain took roughly 60 million dollars worth of ETH and even led to a hard fork of the Ethereum network.

Since blockchain transactions are irreversible, making sure that a project's code is secure is essential. 

-Blockchain technology's highly secure nature makes it difficult to retrieve funds and resolve issues after the fact, so it’s better to prevent vulnerabilities at all costs.

How to Audit a Smart Contract?

The process of a smart contract audit is fairly standard among audit providers. While each auditor's approach may differ slightly, the typical process is as follows:

1. Determine the scope of the audit.

 The smart contract and project specifications are defined by the project (their intended purpose) and the overall architecture. A specification helps the audit team understand the project's goals when writing and using the code.

2. Provide an initial quote based on the amount of work needed.

3. Run tests

Their exact nature will change depending on the auditing team, their analysis tools, and their methods. Usually, both manual and automated tests are carried out.

4. Create a first draft of the report with errors found and provide it to the project team for feedback and follow-up fixes.

5. Publish the final report, considering any action taken by the team to address raised issues.