Not just the token prices and market cap value of cryptocurrencies speaks volumes about the widespread adoption of web3 among the public but also the hacks which engulf huge amounts almost every time.
Interestingly, the smart contracts that induce automation and dictate the guidelines for decentralization are also the central reason for the root of all hacks. These attacks are launched by exploiting the coding vulnerabilities with more devastating effects.
The instances of security breaches are increasingly escalating in today’s times. With that in mind, this blog aims to articulate some of the best web3 security practices applicable to the multifaceted web3 ecosystem.
Web3 offers decentralized solutions to finance, social media, data management and a lot more. Proving itself to be indispensable with improved security and accessibility to peers, let’s find the top trends in web3 and then touch upon the existing threat issues and solutions to them.
Decentralized Finance(DeFi) platforms
Decentralized finance uses cryptocurrencies like Ethereum, Bitcoin and several others for making transactions, substituting fiat currencies and centralized banks. This eliminates the associated costs while furthering highly secure and instantaneous cross-border payments.
The conventional transaction method is completely replaced here by the use of smart contracts, which has every detail of the asset transfer etched within it.
Decentralized autonomous organization (DAO)
DAOs are one of the fascinating approaches of web3 that brings together like-minded individuals from all around to woking together and make decisions. Unlike in centralized organizations where CEOs or CFOs hold the deciding power, the DAO organization distributes the voting power on platform decisions to the user itself.
Again here in DAOs, the rules and regulations to be executed are programmed in smart contracts that run the decentralized autonomous organizations.
Non-fungible tokens(NFTs) are representations of digital ownership of digital arts, music, virtual lands, and domain names which surely means NFTs are more than just collectible. Tokenising creations as NFTs endows the creators with monetary privileges such as royalty benefits.
The digitized document in the form of smart contracts is the proof of digital ownership in buying and selling the NFTs between different parties.
Some Commonly Encountered Dangers In Smart Contracts
Function visibility: While coding, it is more often common that functions are openly visible by default as the states are not clearly defined. This means anyone can execute it, and that leads to possibilities for mishandling smart contracts.
Smart contracts are unmodifiable: Smart contracts are immutable by nature which makes them more prone to threats when there is a coding bug, and that cannot be altered. However, the smart contracts shall be designed with the flexibility to proxies or pausable functions to make amendments in future.
DoS attacks: DoS attacks mean overloading the ports with requests which deny the legit services requests made. Ensuring enough storage and processing power of the nodes and adding failsafe into smart contracts restrains the DoS attacks.
Secure Smart Contract Development Practices – The Only Way Out From Reckless Hacks
Pay attention to blockchain properties: Developers must be careful while coding, especially when it requires calling external contracts that hold the chance for executing malicious code and messing with the contract logic.
Other aspects to be handled carefully are block gas limits, gas costs, random number generation, timestamp dependence, public functions and so on.
Keep up with the pace of new upgrades: While coding smart contracts, it is important to use upgraded versions of libraries and security tools. Advanced security tools are updated to recognise any minor disruptions in the code which are otherwise left unnoticed.
Performing smart contract audits periodically: A periodic pentesting and security audit uncovers any inconsistency in the coding and serves as a reliable way to escape from the clutch of hacks in the web3 space.
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