The growth of AI has led to the development of more decentralized applications, and you know what’s powering them?
Smart contracts!
These immutable self-executing programs ensure that every part of the application functions when certain pre-set conditions are met, and it is just beautiful to watch. However, they have a little immutability problem in that they can not be altered once deployed. This means developers have to be sure they are 100% perfect before deploying them.
But how can they ensure that?
Enter smart contract audits. In the early days of blockchain technology, human auditors handled this manually. However, as blockchain applications became more complicated, so did their smart contracts, thus making it difficult for human auditors to handle smart contract audits.
So, how has AI revolutionized smart contract audits? Find out in this article as we explore the relationships between smart contracts and AI by discussing what smart contract audits looked like before and after AI intervention. Finally, we examine the potential business benefits of AI smart contract audits for your business.
Ready?
What are Smart Contract Audits?
Smart contract audits are detailed processes of analysing a smart contract’s code to ensure the reliability and security of the blockchain applications they power. They simply mean the rigorous process of reviewing the protocol’s code before deploying it to spot vulnerabilities.
For clarity, the main goals of smart contract audits are to ensure that:
- The smart contract functions as intended
- The smart contract is secure
- The smart contract minimizes risks such as financial loss or breaches
As such, the following must be looked out for when carrying smart contract audits:
- Security vulnerabilities
- Incorrect and inefficient coding
- Logic and functionality
- Gas optimization
- Third-party integrations
- Regulatory compliance requirements
- Transparency
It is important to look through all these during smart contract audits to ensure that the smart contract is tamper-proof. Furthermore, the fact that they are deployed on the blockchain makes them immutable, i.e., they cannot be altered once they are deployed.
Therefore, any errors made in the code cannot be corrected, and this may have jarring consequences such as loss of funds. Therefore, it is absolutely important to ensure that any smart contract code has absolutely no vulnerabilities or security flaws. This is why smart contract audits are so important.
Smart Contract Audits Before AI Development – Shortcomings of Traditional Smart Contract Auditing
A team of cybersecurity professionals or security engineers is often responsible for conducting a smart contract audit. Due to its crucial importance, the traditional smart contract auditing process is usually very manual and rigorous prior to AI development.
In fact, the traditional smart contract audit process is characterized by the following features:
1. Manual Code Review
Cybersecurity professionals and security engineers review the smart contract code line by line when conducting smart contract audits conventionally. Sometimes, they use automation tools. However, the bulk of the process is done manually. This can often take weeks or months, depending on the complexity of each contract.
2. High Risks of Fraud and Errors
As with almost all manual processes, manual smart contract audits are prone to human errors. Regardless of the security engineer’s or auditor’s level of expertise, there’s a reasonable chance they’d miss some tiny details. This risk increases exponentially as the smart contract gets more complicated. Consequently, this increases the chances that the ecosystem will be open to fraud and security vulnerabilities when it launches.
In fact, there have been reported cases of flash loan attacks, rug pulls, and smart contract exploits, resulting in billions in losses. For instance, the Poly Network Hack that occurred in 2021 and resulted in the loss of over USD 600 million in cryptocurrencies was caused by overriding a smart contract vulnerability.
3. Little or no Predictive Security Models
Without AI, cybersecurity professionals and security engineers have no scalable way of predicting potential smart contract security risks. They only try to schedule their reviews for specific intervals. This leaves an interval between their scheduled audits for certain vulnerabilities to be exploited.
4. Complex DeFi Transactions
DeFi platforms have been gaining a lot of traction recently. As a result, there has been a growing need for them to process more complex transactions, and this means the smart contracts governing them also need to be complex. Consequently, it has gradually become more difficult for manual smart contract audits to handle the level of sophistication needed in these smart contracts, thus making the DeFi transactions more complex.
5. Limited Time Constraints
This is an obvious one. Looking through hundreds or thousands of smart contract codes line by line is a time-consuming process. This delays the execution of most projects, as they often have specific deadlines. Most teams are often caught between taking too much time reviewing the smart contracts and deploying them before the deadline.
6. Regulatory Uncertainty
Manually keeping up with the constantly changing regulatory requirements governing blockchain transactions can be a tedious task. And when you factor in the fact that smart contract auditors have to implement these requirements manually by going through the code line by line, it makes it even difficult.
These complications make it almost impossible to keep up with regulatory best practices when working with exponentially growing blockchain systems or DeFi applications.
So, what’s the solution to these challenges?
The integration of AI into smart contracts audit has had some profound impacts on the process’s effectiveness. In the next section, we discuss these impacts in detail.
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Impact of AI on Smart Contract Audits
The following are some of the potential impacts of using AI models to scan, assess, and monitor smart contracts:
1. Detection of More Vulnerabilities
Instead of manually perusing each line of code, AI can scan smart contract source codes and detect vulnerabilities such as reentrancy attacks, integer overflows, and access control flaws.
For example, research on Advanced Smart Contract Vulnerability Detection shows that large language models (LLMs) trained with high-quality datasets outperform other methods in vulnerability detection. Their ability to analyze contract logic and transaction flows and run simulations of potential attacks makes them suited for this purpose.
2. Efficient Smart Contract Audits
While they can seemingly detect more vulnerabilities in smart contracts than human agents, they also do so with significantly fewer resources. This increased efficiency can be attributed to their ability to automate the scanning and analysis of smart contract code. As a result, the auditing process occurs quickly without sacrificing quality.
3. Cost-effectiveness
The ability of AI agents to automate the vital process involved in smart contract audits reduces the need for manual supervision. In practice, it leads to fewer security engineers auditing the same smart contract code. Consequently, the overall cost of the entire process is greatly reduced.
4. Regulatory Compliance
It’s easier to keep up and adhere to regulatory best practices when using AI for smart contract audits. This is because AI models are capable of assessing the code’s compliance with regulatory requirements like KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. The AI models are capable of flagging non-compliant or suspicious transactions while also staying updated with the latest regulatory updates.
5. Standardized and Verified Smart Contracts
AI-powered smart contract audits are more likely to produce standardized and verified smart contracts compared to human editors. This likelihood can be attributed to a lot of factors, such as the fact that AI can compare the smart contract code to industry best practices. AI can also provide automated security suggestions based on the real-time updates it gathers from different data sources.
6. Improved Accuracy
While human agents may miss tiny details when reviewing smart contract codes, the possibilities of that happening with AI are slimmer. Regardless of the smart contract code’s complexity, these AI agents have been trained to scrutinize every line of code to ensure that no errors slip through the cracks. As a result, AI-powered smart contracts produce audit results with a greater level of accuracy and dependability.
7. Continuous Learning and Better Ability to Handle Evolved Security Threats
Not only do AI smart contracts spot the vulnerabilities and errors in a smart contract code, but they are also capable of continuous learning from previous audits. AI models are built to learn from both input and training data to improve the code further. This continuous learning process plays a vital role in making sure the code adapts dynamically to the changing cybersecurity requirements.
What Does this Mean for Your Business? – Business Benefits of AI-Powered Smart Contract Audits
Based on the major AI impacts described above, it is safe to say that the combination of smart contracts and AI makes smart contract audits faster, cheaper, more accurate, and more scalable.
But what do these things mean for your business?
Well, for starters, the time effectiveness means that you can now launch your products or projects quicker. In that sense, AI-powered smart contracts speed up your time-to-market period. Additionally, cost-effectiveness gives your business the opportunity to increase its bottom line or profit margin.
But that’s not all.
AI-powered smart contract audits also make it easy for your business to deploy more standard smart contracts. This gives you a much-needed competitive advantage to tackle the emerging problems in your business.
So what are you waiting for?
Conclusion: Gain a Competitive Edge With Expert Smart Contract Audit Services
Blockchain security will never be the same again because of AI. By automating vulnerability detection and improving audit efficiency, AI tools have made themselves indispensable for smart contract audits.
And the potential business benefits?
It’s mind-blowing! Businesses can spend even less on smart contract audits, get their products to market quickly, and stay updated with new security threats as they evolve.
At this point, it feels almost counterproductive to approach smart contract audits without AI.
That’s why smart contract audit services like Debut Infotech Pvt Ltd are focused on helping businesses of all sizes leverage this advantage expertly. With the right
smart contract audits in no time.
Get in touch today to get started.
