Emerging Tech & Niche Security

Web3 & Smart Contract Audits

  • May 9, 2025
  • 0

Sherlocked Security – Web3 & Smart Contract Audits

Ensuring the Security and Integrity of Blockchain Applications and Smart Contracts

1. Statement of Work (SOW)

Service Name: Web3 & Smart Contract Audits
Client Type: Blockchain Projects, DeFi Platforms, Crypto Exchanges, Web3 Startups
Service Model: Project-Based Assessment & Retainer Advisory
Compliance Alignment: NIST 800-53, ISO/IEC 27001, PCI-DSS, GDPR, relevant blockchain standards

Web3 & Smart Contract Audits Include:

  • Comprehensive review of smart contract code and logic
  • Identification of vulnerabilities in contract execution, logic, and data storage
  • Security checks for reentrancy attacks, integer overflows/underflows, and unauthorized access
  • Validation of gas efficiency and optimization issues
  • Analysis of contract interactions with other contracts, tokens, and decentralized applications (dApps)
  • Review of contract deployment mechanisms and access controls
  • Compliance checks for blockchain-specific regulations (e.g., GDPR for token-related data)
  • Recommendations for improvements in security, performance, and scalability
  • Simulation of potential attack vectors and the effectiveness of mitigation strategies

2. Our Approach

[Code Review] → [Vulnerability Assessment] → [Performance & Gas Optimization] → [Compliance Review] → [Security Testing] → [Reporting & Recommendations]

3. Methodology

  • Code Review:

    • Detailed analysis of the smart contract source code, focusing on best practices, secure coding standards, and proper use of blockchain APIs.

  • Vulnerability Scanning:

    • Automated and manual checks for vulnerabilities such as reentrancy attacks, integer overflows, and access control flaws.

  • Gas Efficiency & Optimization:

    • Assess the gas consumption of smart contracts to ensure optimization, reduce costs, and improve efficiency.

  • Security Testing & Simulation:

    • Simulate potential attacks, such as front-running, race conditions, and DoS attacks, to evaluate how the contract behaves under malicious scenarios.

  • Inter-contract Communication Review:

    • Assess how the smart contract interacts with other contracts, tokens, and dApps to identify security gaps or vulnerabilities in multi-contract interactions.

  • Deployment & Access Control:

    • Review deployment mechanisms, key management processes, and access control to ensure that only authorized parties can deploy or interact with the contract.

  • Compliance & Regulatory Review:

    • Ensure that smart contracts adhere to relevant regulatory frameworks such as GDPR, KYC/AML for crypto-related contracts, and other local or international blockchain regulations.

  • Reporting & Recommendations:

    • Generate detailed reports of vulnerabilities, issues identified, and provide remediation steps, including proposed code changes and security enhancements.

4. Deliverables to the Client

  1. Smart Contract Audit Report: Detailed documentation highlighting vulnerabilities, risks, and inefficiencies in the smart contract code.
  2. Security Assessment: A comprehensive review of security controls and best practices within the smart contract architecture.
  3. Gas Optimization Report: A summary of gas consumption issues, along with optimization recommendations to lower costs and improve contract efficiency.
  4. Compliance Review: Report identifying any regulatory gaps or non-compliance issues.
  5. Attack Simulation Findings: A list of simulated attack scenarios, including identified weaknesses and their potential impact.
  6. Remediation Plan: Prioritized and actionable steps to address vulnerabilities and optimize the contract before deployment.

5. What We Need from You (Client Requirements)

  • Smart Contract Code: Access to the full source code of the smart contract(s) for review.
  • Deployment Information: Information on the intended deployment environment, including platforms (e.g., Ethereum, Binance Smart Chain).
  • API and Token Specifications: Details on the APIs and tokens that the smart contracts interact with.
  • Risk Models: Any existing risk assessments or threat models for the Web3 platform.
  • Compliance Requirements: Any specific regulatory or legal compliance requirements that the contract must adhere to (e.g., GDPR, AML/KYC).
  • Testnet or Live Environment Access: Access to the testnet or live deployment environment for integration testing and simulation.

6. Tools & Technology Stack

  • Code Analysis & Scanning:

    • MythX, Slither, Oyente, Manticore, Truffle Suite

  • Smart Contract Testing:

    • Ganache, Remix IDE, Hardhat, Infura

  • Gas Efficiency Analysis:

    • EthGasStation, Remix Gas Profiler

  • Compliance Tools:

    • Chainalysis, Tokeny Solutions

  • Blockchain Simulation:

    • Tenderly, Forta Network, TestRPC

7. Engagement Lifecycle

  1. Kickoff & Scoping: Initial meeting to define scope, gather required documents, and understand the smart contract objectives.
  2. Code Review & Vulnerability Scanning: Analyze smart contract code for common security vulnerabilities and optimization issues.
  3. Gas Optimization: Assess the contract for gas inefficiencies and provide recommendations for reducing costs.
  4. Security Testing: Perform penetration testing and simulation of attacks to evaluate contract behavior under malicious conditions.
  5. Compliance & Regulatory Review: Review the contract for alignment with relevant laws and blockchain-specific regulations.
  6. Reporting & Recommendations: Deliver a comprehensive report detailing findings and remediation steps.
  7. Post-Deployment Advisory: Provide ongoing support after deployment to address any emerging issues or additional audit needs.

8. Why Sherlocked Security?

Feature Sherlocked Advantage
Comprehensive Contract Audits Full analysis of code, logic, security, and performance
Security-First Approach Focus on identifying and mitigating high-risk vulnerabilities
Gas Optimization Expertise Techniques to lower gas consumption and improve contract efficiency
Compliance Assurance Ensure contracts meet relevant legal and regulatory standards
Real-World Attack Simulation Simulate and assess the contract’s resilience against malicious behavior

9. Real-World Case Studies

Smart Contract Audit for DeFi Platform

Client: A decentralized finance (DeFi) platform launching a yield farming contract.
Challenge: Potential vulnerabilities in contract interactions and inadequate gas optimization.
Solution: Audited the smart contract for common issues, optimized gas usage, and recommended code improvements for security and efficiency.
Outcome: The contract launched securely, with reduced gas costs and a strong security posture.

Compliance Review for Token Issuance

Client: A cryptocurrency startup launching a new token.
Challenge: Compliance with AML/KYC regulations and ensuring smart contract security.
Solution: Conducted a thorough audit, focusing on security vulnerabilities and compliance issues, including ensuring that user data was protected in line with GDPR.
Outcome: The token launch was successful, meeting regulatory requirements and having no critical security vulnerabilities.

10. SOP – Standard Operating Procedure

  1. Initial Scoping: Define scope, gather smart contract code, and identify objectives.
  2. Code Analysis: Review the smart contract for vulnerabilities, code quality, and security best practices.
  3. Gas Efficiency Assessment: Analyze gas consumption patterns and identify inefficiencies.
  4. Security Testing: Simulate attacks (e.g., reentrancy, overflow, and unauthorized access).
  5. Compliance Review: Check for compliance with regulatory requirements such as GDPR, AML, and KYC.
  6. Reporting: Document findings, including vulnerabilities, inefficiencies, and compliance issues.
  7. Recommendations: Provide actionable recommendations for remediation.
  8. Post-Deployment Monitoring: Offer ongoing support and advisory after contract deployment.

11. Web3 & Smart Contract Audit Readiness Checklist

1. Pre-Engagement Preparation

  • [ ] Complete smart contract source code
  • [ ] Detailed description of contract functionality and user interactions
  • [ ] Deployment environment (testnet, mainnet) details
  • [ ] Access to API documentation and external contract interactions
  • [ ] Regulatory compliance documents (GDPR, AML/KYC)
  • [ ] Threat models or risk assessments (if available)

2. During Engagement

  • [ ] Perform vulnerability scanning using automated tools (MythX, Slither, Oyente)
  • [ ] Manual review of code for security flaws and logic errors
  • [ ] Analyze gas consumption and recommend optimizations
  • [ ] Simulate attacks and penetration testing to evaluate contract resilience
  • [ ] Review contract’s interactions with other smart contracts and tokens
  • [ ] Perform regulatory and compliance review based on blockchain standards

3. Post-Review Actions

  • [ ] Provide comprehensive audit report with identified vulnerabilities, inefficiencies, and compliance gaps
  • [ ] Deliver remediation plan with prioritized actions
  • [ ] Advise on post-deployment monitoring and audits
  • [ ] Offer ongoing support in case new vulnerabilities are discovered post-launch
  • [ ] Assist with final testing in live environment (if required)

4. Continuous Improvement

  • [ ] Schedule regular audits for deployed smart contracts to ensure ongoing security
  • [ ] Update contracts with improved security patches and optimizations as needed
  • [ ] Monitor for emerging vulnerabilities and threats in Web3 ecosystems
  • [ ] Conduct periodic compliance reviews in response to regulatory changes
  • [ ] Maintain secure coding practices and train teams on smart contract security
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