Building Secure Smart Contracts: Best Practices and Common Vulnerabilities

Although smart contracts are supposed to be virtually impossible to tamper with, vulnerabilities that appear during development make them susceptible to various cyberthreats. What can developers do to secure them?

Smart Contract Vulnerabilities for Developers to Consider 

Smart contract popularity continues to rise, prompted by success in the decentralized finance sector. Approximately 118,000 were deployed on the blockchain in 2022, up 50% year over year. Amid this rapid growth, privacy, security and data integrity issues have run rampant. Out of all of these issues, vulnerabilities are the most pressing. 

The surge in contract deployment has inadvertently given rise to coding errors. Logical, syntax and semantic errors are among the most common vulnerabilities, enabling bad actors to exploit weaknesses or take advantage of loopholes. Since they are so numerous, they can be broken down into sub vulnerabilities that are challenging to identify en masse. 

Integer overflows and underflows are common issues in Solidity that occur when arithmetic operations exceed the minimum or maximum value the data type can represent. Whether malicious or not, an individual may exploit these weaknesses to withdraw funds or invalidate a time lock, enabling them to withdraw more than they should be able to. 

Developers often overlook the severity of mishandled exceptions. If low-level functions like address.send() or delegatecall() encounter errors, they return a false value without exceptions. Any transactions executed before those functions won’t be reverted, causing unintended behaviors. The contract may continue to execute, draining funds and gas. 

While tampering with contracts executed and stored on the blockchain should be extremely difficult, security weaknesses simplify malicious tampering. Unfortunately for developers, identifying and rectifying these issues can be challenging — many have numerous sub vulnerabilities because they can contain any number of triggers. 

The Implications of Overlooking Contract Vulnerabilities

Since the blockchain is decentralized and operates on the fringes of regulation, vulnerabilities have considerable implications. For instance, while big block sales limit trades to 5%-10% of a security’s daily trading volume, exploits can cause unintended behavior, affecting both the intermediaries facilitating the trade and the other market participants. 

For example, recursive calls could prevent the contract from completing its initial call, and a denial-of-service attack would obtain similar results. An unresponsive contract can delay critical operations, potentially affecting the market. At the very least, it affects individuals' ability to access and use their funds as they see fit. 

In the worst-case scenario, an attacker exploits overlooked weaknesses to drain a contract. For instance, they can leverage a mishandled exception to force their target to run out of gas or exceed their call stack limit. 

A time-dependence attack operates comparably, enabling attackers to exploit time-based logic by altering a mined block’s timestamp. This way, they can prematurely release funds or delay critical function execution. While manipulating cryptocurrency markets is illegal in many jurisdictions, the blockchain’s decentralized nature often benefits bad actors.

Best Practices for Developing Secure Smart Contracts 

Developers should follow these best practices to secure their smart contracts. 

1. Conduct Thorough Testing

Thorough smart contract testing is crucial for catching hidden flaws. In addition to executing typical test cases, you should strongly consider addressing edge cases to identify potentially abnormal behavior. 

2. Make Functions Private

Solidity has public functions enabled by default, meaning anyone can call on them. You must ensure functions and state variables are either internal or private. If you want functions to be able to be called externally, mark them as external. Do not proceed with “public” unless you know exactly what you’re doing — it has no access restrictions. 

3. Conduct Code Audits

Even the most experienced developers make mistakes. Call on a peer, a debugging tool or a reputable third-party auditor to review your code. Having a second party search for potential errors with fresh eyes is essential for uncovering subtle flaws. 

4. Do Not Reuse Code

In many cases, reused code is a security weakness waiting to be exploited. Third-party code that is improperly documented or tested may save you time and resources, but it opens you up to zero-day vulnerabilities. Moreover, it may be difficult to identify and address errors because you didn’t create the code. 

5. Account for Edge Cases

Account for edge cases — for example, you should set an upper limit on gas usage in a call to prevent loops or mishandled exceptions from draining it. Regardless of how unlikely they are, factoring them into development is vital for preserving security. 

The Importance of Staying Up to Date With Security 

Staying up to date with the latest best practices and security tools is critical. Many modern solutions have accounted for some of the most common smart contract vulnerabilities and offer built-in safeguards. Of course, the implications extend beyond development — securing these contracts helps protect and legitimize the blockchain and decentralized finance.