Owing to the advancement of blockchain technology, decentralized applications (DApps) has become the new norm of engaging with digital systems. One of the main platforms for the decentralized applications is Ethereum that has given a tool to the developers to create smart contracts which are the digital contracts that automatically execute the terms of the agreement coded in it. Even though smart contracts are very helpful in developing decentralized systems, they also bring in new security issues. Insecure code is dangerous as it creates openings that hackers can use to wreak havoc, thus incurring losses and implying the firm’s image.
It’s important for the Ethereum ecosystem to expand by protecting their contracts from possible threats while using the platform. In this article, the authors will present the core security principles and practices that any Ethereum developer should follow when developing smart contracts.
What is Ethereum?
Ethereum is a public blockchain which enables developers to create decentralized applications (DApps) using smart contracts. While Bitcoin is one of the first decentralized digital currencies, Ethereum is a platform designed to support the development of Decentralized applications and code execution in a decentralized manner securely, transparently and immutably.
Ether (ETH) is the native cryptocurrency of Ethereum which is used for performing transactions and for providing computational power (referred to as ‘gas’) for the execution of smart contracts. This has been due to Ethereum’s programmability and rich development community which has made it the most used blockchain for dApps, DeFi, and NFTs.
What makes Smart Contract Security Important?
Etherium based smart contracts once deployed cannot be changed. This feature is suitable for the development of trustless applications; nevertheless, this also implies that once a bug or a loophole has been discovered in the smart contract code, it cannot be revised. If an attacker or ‘hacker‘ is able to take advantage of a vulnerability, the results can be devastating; from the loss of money to the failure of an entire DApp.
Famous cases, such as the DAO hack in 2016, during which millions of dollars in Ether were stolen, confirm the necessity to pay attention to the security of smart contracts. Before deploying code to production environment, the developers must make sure that the code they have written is free from vulnerabilities as even a small bug can cause critical damage.
Security Principles for Ethereum Smart Contracts Development
Here are several best practices that developers should follow to ensure that their smart contracts are secure:
1. Use libraries which have been developed and tested for quite some time
Thus, to reduce the number of possible risks in coding from the ground, the recommendations are to apply the best-tested libraries and frameworks. Some of the libraries that are available in the current world to support the writing of smart contracts in Solidity is OpenZeppelin which offers secure solutions for common patterns which includes the token standards such as the ERC-20, and ERC-721.
OpenZeppelin, for instance, has been through rigorous peer review and is popular among the Ethereum developers’ community. Through this, the developers are assured of not creating security breaches in their code since the libraries are already tested for security flaws.
2. The Principle of Least Privilege should be observed
On the same note, it is important that the smart contracts are built with the principle of least privilege. This implies that there should be least privilege for every function or user to perform his or her task. Whenever possible, do not allow any function to hold too much authority and be certain that important operations (including the transfer of contract ownership) are to some extent safeguarded and limited.
The principle of least privilege can also be extended to external calls. When dealing with other contracts ensure that other entities do not get too much control and access to your contract data and functionality. This can help in avoiding the risk where some people with bad intentions may have a chance to infiltrate your system through external contracts with the help of some weaknesses.
3. Avoid reentrancy attacks
Reentrancy attack is one of the most popular kinds of vulnerabilities in the Ethereum smart contracts. It happens when an external contract is called by another contract and before the called contract is done with its execution, the attacker is able to put through recursive calls to the original contract. Such an approach may have adverse effects, for example, it may cause funds to be withdrawn from the contract.
The DAO hack is one of the most popular examples of reentrancy attack. The malicious participant managed to trigger the withdraw function of the DAO multiple times by calling it in a recursive manner. To prevent reentrancy attacks, developers should adopt the “checks-effects-interactions” pattern:
- Checks: Also, it is significant to check the required conditions during the function (for example, the user’s balance).
- Effects: Make changes in the state variables (say balances) as soon as the checks have been made.
- Interactions: It is only safe to call external contracts or transfer Ether after the state has been updated.
By following this pattern, the developers can guarantee that the contract’s state is updated before any external call is made and hence prevent re-entrancy attacks.
4. Implement secure math operations
Arithmetic pitfalls including integer overflow and underflow are common in the Solidity language. These vulnerabilities may happen when the numbers are more than the upper limit or less than the lower limit and wrong values are assigned to the variables. Left untreated, these issues can result in behaviors that are hard to predict such as incorrect token balances or problematic business rules.
To avoid such a risk, the developers should employ the SafeMath library from OpenZeppelin that contains functions for performing the arithmetic operations safely. SafeMath ensures that if the arithmetic operation leads to an overflow or underflow the transaction is reverted thus avoiding the wrong results.
5. Ensure that you have proper access control mechanisms
A large number of smart contract issues stem from inadequate handling of the access control. As an example, if an administrative function, let’s say, token minting, is not protected well, an attacker will be able to compromise the function and use it to his advantage in the contract.
It is therefore important for developers to put in proper measures of access control so that only relevant users can perform certain tasks. OpenZeppelin’s Ownable contract in Solidity allows a straightforward way to include ownership and limit some of the functionalities to the owner of the contract. Also, you can use the AccessControl contract to manage permission in a more detailed manner.
6. Ensure safe external calls
Thus when interacting with other smart contracts it is always recommended to be very cautious. External calls are inherently risky because the called contract may behave strangely or in a manner that is unknown to the caller. To minimize these risks, developers should:
7. Regular auditing and code reviews
It is for this reason that no matter how professional a developer is, a mistake is bound to occur. This risk can only be lessened through frequent code audits and reviews. It’s also important to involve third-party auditors who can review the contract code and reveal some potential issues which the initial developers might have missed.
It is preferred that audits are conducted by trustworthy companies that specialize in Ethereum smart contract security, such as ConsenSys Diligence, OpenZeppelin or Trail of Bits. Also, one should consider implementing a public bug bounty program under which anyone can try to discover possible flaws in the code and report them to the developers prior to the code’s deployment.
8. Consider upgradability carefully
Another drawback of the Ethereum smart contracts is that they are unchangeable after they are written and deployed. As a positive side, the immutability makes everything transparent and reliable but on the other side if there is any kind of bug or any kind of threat then it cannot be rectified. To this, some developers employ upgradable smart contracts where the contract’s logic can be altered after deployment.
Nevertheless, upgradable contracts also have their own security issues that come with them. It is also crucial that the developers establish that the upgrade process itself is also secure and that only the rightful people are allowed to perform the upgrade. This can be done using standardized frameworks to make this process easier and most importantly secure.
Conclusion
With the increasing number of applications utilizing Ethereum, it is important for smart contract security to be at the forefront of developers’ minds. In order to minimize the risks of vulnerabilities in the contracts, it is recommended to follow the best practices: to use the well-tested libraries; not to allow reentrancy attacks; to control access to contracts; to perform proper testing.
This is because Ethereum is a decentralized platform once a contract has been deployed there is no way of altering it. Hence, it is not enough to spend time making sure your code is secure; it is mandatory to do so. Being vigilant and applying security measures protects users’ money, preserves decentralized applications, and, therefore, positively influences the health of the blockchain environment.
