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How To Audit Crypto Token

From: Coinverse

In this article, we will talk about the process of auditing a crypto token in detail. Like the previous article, we will use an ERC-20 token for simplicity. ERC-20 refers to all the tokens built on the Ethereum blockchain.

What Is A Crypto Audit

Let’s start with the basics. First, Cryptographic tokens are nothing but rules encoded in a smart contract or the token contract. The contract contains a map of all the different account addresses and balances. An audit process is an extensive analysis of the code written in the token contract. It aims to find/debug any minor vulnerabilities in the code. The audit process helps guarantee that the contract is free of bugs and behaves as intended.

Why Do Projects Need An Audit

For starters, most if not all exchanges thus request a 3rd party audit before listing any crypto token. This helps them confirm its security for the exchange’s users. Exploiting vulnerabilities of an un-audited crypto token can result in the loss of clients’ assets. A crypto audit performed by a reputable cryptocurrency auditor indicates the project’s reliability to investors. Now that we have covered the basics, let’s talk about the complete process of auditing a crypto token.

Process Of Auditing A Crypto Token

Surprisingly token audits don’t have a strict methodology or process that everyone has to follow. However, standardized steps from industry experts make the process easier. These can be divided into the following parts.

  • Initial Preparations
  • Automatic Analysis
  • Manual Analysis
  • Generating Initial Audit Report
  • Code Refactor
  • Final audit

Now let’s discuss them in detail

Initial Preparations

This step involves doing all the basic stuff like Collecting all the documentation and code in one place. You should also check if the code contains the same logic declared in the documentation. You can also lock down the first version of the source code to ensure transparency in the audit process. It also helps differentiate between the audited and unaudited versions of the code. It’s also a good practice to put a version number or time stamp for different code versions. This helps avoid confusion later on.

Automatic Analysis

Now that the initial preparations are over, the code can go through an automatic analysis to avoid apparent mistakes/vulnerabilities. Auditing your code early in the development lifecycle helps prevent potentially catastrophic vulnerabilities after launch. There are many tools available in the market. Common ones include:

  • SmartCheck
  • Remix
  • Solhint

This helps ensure the quality of the code

Manual Analysis

catastrophic The next obvious step is manual analysis. Plz, note that the auditor, in this case, must have a clear understanding of the use cases and the complete infrastructure of the code. This is the crucial phase of blockchain audit as it helps analyze the threats and vulnerabilities. This can reveal data spoofing and data tempering and enable the detection of DDoS attacks on a blockchain system.

Generating Initial Audit Report

Now all the MUSTs and SHOULDs used in the standards specification are taken care of. After this process is complete, an initial audit report is generated. This contains all the findings and recommendations for the client to review.

Code Refactor

Upon the client’s approval, developers now make all necessary changes and apply all the fixes to the code to make it error-free. In addition, it helps avoid exploiting revealed vulnerabilities to estimate the scope of potential threats. This is then sent for final review to the auditors.

Final Audit Report

After the final audit report is generated, auditors try to combine all the details and analysis into a report to submit to the client. This also involves a “functionality analysis” auditors check for desired functionalities and document all observations before submitting them to the client.

Please note that the steps of an audit may vary depending highly upon the tokens auditing team. For example, it can take weeks for a project to be audited; the size and complexity determine this. Similarly, the cost of auditing a project is determined by the above factors. This concludes the article. If you want to avoid all the hassle of finding a good auditing team, you can contact ELP (Enterprise Legion Management) and outsource all the work. They follow a strict, standardized process to ensure the reliability and security of the project. In addition, they have a team of trusted and reputed industry experts to manage your projects.

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