How to develop secure and optimized blockchain smart contracts? – 5 rules | Nextrope Academy

Paulina Lewandowska

10 Oct 2022
How to develop secure and optimized blockchain smart contracts? – 5 rules | Nextrope Academy

Why is the security of smart contracts important?

Smart contracts are a major part of applications based on blockchain technology. In the development process of smart contracts, we should maintain the highest security standards because of factors such as:

  • in many systems, they are responsible for the most critical functionality, the incorrect operation of which can be associated with a number of very unpleasant consequences, including irreversible loss of funds, a logical error ruining the operation of the entire application/protocol,
  • a smart contract that has already been published on the web cannot be modified. This feature means that bugs and vulnerabilities that are diagnosed after the contract is launched productionally cannot be fixed. (There is an advanced technique to create "upgradeable contracts," which allows the contract logic to be modified later, but it also has a number of other drawbacks and limitations that do not relieve the developer from writing secure code. For the purposes of this article, we will skip a detailed analysis of this solution).
  • The source code of most contracts is publicly available. It is good practice to publish the source code in services such as Etherscan which significantly increases the credibility of the application data or defi protocols. However, making the code publicly available entails that anyone can verify such code for security, and use any irregularities to their advantage.

Learning to write secure smart contracts is a process that requires learning many advanced aspects of the Solidity language. In this article, we will present 5 tips to simplify this process and secure our software from the most common mistakes.

1. Accurate testing of smart contracts

The first, and at the same time the most important factor that allows us to verify that our contract works properly is writing automated tests. The testing process usually allows us to reveal various security gaps or irregularities at an early stage of development. Another advantage of automated tests is protection against code regression, i.e. a situation when during implementation of new functionalities bugs are created in previously written code. In such tests we should check all possible scenarios, 100% code coverage with tests should not be a goal in itself, but only a measure to help us make sure that tests scrupulously check every method on our contract.

2. Configuration of additional tools

It is worthwhile to make use of tools that are able to measure and check the quality of the software we provide. Tools you should use in your daily work are:

  • A plugin for measuring code coverage e.g. solidity-coverage. Expanding on the thought from the first point that code coverage should not be an end in itself, it is nevertheless worth having such analytics in the testing process. By analyzing code coverage with tests, we are able to easily see which code fragments require us to write additional tests.
  • Framework for static code analysis e.g. slither, mythril. These are tools that, with the help of static analysis, are able not only to point out places in our code where a vulnerability exists, but also to offer a number of tips. Following these tips can improve not only the security, but also the quality of our software.

3. Openzeppelin smart contract library

There are many libraries and ready-made contracts that have been prepared for later use by developers of blockchain applications. However, each of these libraries needs to be verified before use to see if it has any vulnerabilities. The most popular library at the moment is openzeppelin. It is a collection of secure, tested smart contracts used in many of DeFi's most popular protocols such as uniswap. It allows us to use the most commonly used implementations of ERC (Ethereum Request For Comments) standards and reusable contracts.

The library has a large range of components that can be used to implement the most popular functionalities on the smart contract side. I will give two applications of the library as examples. However, we believe it is worth exploring all the capabilities and contracts that are provided there.

  • Ownable and AccessControl extensions

These extensions allow us to very easily add access control to functions that, according to business requirements, should only be available for execution to authorized addresses. An example from the documentation showing the use of the Ownable extension in practice:

pragma solidity ^0.8.0;
 
import "@openzeppelin/contracts/access/Ownable.sol";
 
contract MyContract is Ownable {
    function normalThing() public {
        // anyone can call this normalThing()
    }
 
    function specialThing() public onlyOwner {
        // only the owner can call specialThing()!
    }
}

As you can see, using the openzeppelin library is not only very easy, but also allows you to write more concise code that other developers can understand.

  • Implementations of the popular token standards ERC-20, ERC-721 and ERC-1155

Many decentralized applications and protocols are based on ERC-20 or NFT tokens. Each token must have an implemented interface that works according to the specification. Implementing a token entirely on your own is associated with a high risk of error, so our token may have security holes or problems with operation on various exchanges and wallets. With the help of openzeppelin library we are able to prepare a standard, functional token and enrich it with the most popular extensions with little effort. A good place to start is the interactive token configurator in the openzeppelin documentation, it allows us to generate token source code that will meet functional requirements and security standards.

4. Using new versions of the Solidity language

An important safety tip is that projects should use new versions of the Solidity language. The compiler requires us to include Solidity version information at the beginning of each source file with a .sol extension:

pragma solidity 0.8.17;

Along with new versions of the language, new features are introduced, but in addition to this, it is also important that fixes are added to various kinds of known bugs. A list of the bugs found in each version can be found in this file. As you can see, with newer versions of the language the number of bugs decreases and is successively fixed.

The language's developers in the official documentation also recommend using the latest version in newly implemented smart contracts:

When deploying contracts, you should use the latest released version of Solidity. Apart from exceptional cases, only the latest version receives security fixes”.

5. Learning from other people's mistakes

An essential factor for delivering secure software is the sheer knowledge of the advanced aspects of the Solidity language, as well as awareness of potential threats. In the past, we have witnessed many vulnerabilities where multi-million dollar assets fell prey to the attacker. Many examples of such incidents can be found on the Internet, along with detailed information on what mistake was made by the developers and how it could have been prevented. An example of the above is an article explaining the "reentrancy" attack, with the help of which the attacker stole $150 million worth of ETH. The list of possibilities for attacking smart contracts is definitely longer, so it is worth reading the list of the most popular vulnerabilities in Solidity. A good way to learn security is also to take on the role of an attacker, for this purpose the Ethernaut service is worth a look. There you will find a collection of tasks involving hacking various smart contracts, these tasks will help consolidate previously acquired security knowledge and learn new advanced aspects of the Solidity language.

Summary

In conclusion, software security of decentralized applications is a very important, but also difficult issue requiring knowledge of not only the programming language itself. Also required are testing skills, a willingness to constantly explore the topic of smart contract vulnerabilities, knowledge of new libraries and tools. This topic is vast and complicated and the above 5 points are just guidelines that can help improve the security of our code and with the associated learning. Also take a look at other articles in the Nextrope Academy series, where we take a closer look at other technical issues.

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Authorization and Identity: Chainlink Use Cases

Karolina

14 Feb 2024
Authorization and Identity: Chainlink Use Cases

Chainlink stands at the forefront of enhancing security and compliance within smart contract-enabled blockchain networks. By enabling direct access to real-world data, Chainlink ensures that blockchain applications can operate with the same level of trust and verification as traditional systems. This integration is crucial for a wide range of applications, from financial services requiring Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance to any form of digital agreement that needs to securely verify the identity of parties involved.

Overview

Chainlink is a decentralized oracle network that plays a critical role in bridging the gap between smart contracts on blockchain networks and real-world data. It enables smart contracts to securely interact with external data.

  • Decentralized Data Oracles. Chainlink's network of decentralized oracles ensures that data fed into smart contracts is accurate and tamper-proof, mitigating risks associated with relying on a single data source.
  • Smart Contract Connectivity to Real-World Data. It facilitates the seamless integration of external data sources, such as financial market data, weather information, and much more, enabling smart contracts to execute based on inputs from the real world.
  • Chainlink VRF (Verifiable Random Function). This feature provides a secure and provably fair source of randomness for blockchain applications, crucial for gaming, NFTs, and any application requiring random number generation.

READ: "What is Chainlink"

When it comes to authorization and identity verification, Chainlink's role becomes even more crucial. By connecting smart contracts with external data sources, such as governmental identity databases or digital identity verification services, Chainlink enables the creation of blockchain applications that require verified human identities. This capability is essential for applications that must adhere to regulatory standards or for those seeking to mitigate the risk of fraud.

Moreover, Chainlink's decentralized nature ensures that the process of identity verification is not only secure but also resistant to manipulation. By leveraging multiple independent oracles to fetch and validate data before it's provided to a smart contract, Chainlink ensures a level of reliability and trustworthiness that centralized data sources cannot match. This decentralized approach to authorization and identity verification opens up new possibilities for blockchain applications, making them more accessible, compliant, and secure for users around the globe.

The integration of Chainlink's decentralized oracle network into the domain of authorization and identity verification heralds a new era of security, efficiency, and compliance for blockchain applications. By leveraging real-world data and external verification services, Chainlink enables smart contracts to perform functions that were previously unthinkable in the blockchain space. Here, we explore several key use cases where Chainlink's technology significantly impacts authorization and identity verification processes.

E-Signatures

In the digital age, e-signatures have become the norm for legally binding agreements, eliminating the need for physical presence or paper-based documents. Chainlink oracles facilitate the integration of blockchain applications with leading e-signature providers like DocuSign. This integration ensures that e-signatures can be verified and recorded on the blockchain, providing immutable evidence of agreement and authorization. Furthermore, by enabling smart contracts to interact with e-signature solutions, Chainlink opens the door to automated contract execution based on the completion of digitally signed agreements, thereby streamlining business processes and reducing the time and cost associated with manual verification.

Biometrics for Smart Contract Authorization

Unstoppable Domains uses Chainlink oracles to enable users to tie their off-chain Twitter identity to their on-chain Ethereum domain name (Source: chain.link)

Biometric verification offers a high level of security and convenience for identity verification, leveraging unique physical characteristics such as fingerprints or retinal patterns. Chainlink enables smart contracts to securely access and verify biometric data, ensuring that only authorized individuals can trigger certain actions on the blockchain. This use case is particularly relevant for access control systems, secure transactions, and identity verification processes that require a high degree of trust and security. By connecting smart contracts with biometric databases and verification services through Chainlink oracles, blockchain applications can achieve a new level of security and fraud prevention.

Credential Verification

Credential verification is crucial in numerous applications, from financial transactions requiring proof of funds to access systems demanding specific security clearances. Chainlink oracles play a pivotal role by securely relaying credential verifications from external systems to the blockchain. This capability allows smart contracts to automatically verify users' credentials in real-time, facilitating seamless transactions and interactions that require verified identity or authorization credentials. For example, a decentralized finance (DeFi) platform can use Chainlink to verify a user's creditworthiness or asset ownership before allowing them to participate in lending or borrowing services.

Social Media Identity and Domain Names

The integration of social media identities with blockchain applications enhances user experience by providing more intuitive and human-readable identifiers, such as domain names or social media handles. Chainlink oracles facilitate this by securely linking off-chain social media identities to on-chain addresses or domain names. This use case not only improves the usability of blockchain applications but also adds an extra layer of verification, as users can easily confirm the authenticity of the parties they are interacting with.

Intellectual Property Management

Chainlink's decentralized oracle network enables smart contracts to interact with external IP databases for verifying ownership and facilitating transactions related to intellectual property (IP). This application is particularly useful for copyright and trademark management, patent licensing, and royalty distribution. By automating IP verification and transactions through Chainlink, creators and owners can more efficiently manage their rights and receive payments, while users gain access to verified IP assets.

Contribution Bounties in Open Source Projects

Open-source projects can leverage Chainlink oracles to automate the verification of contributions and the distribution of bounties. By connecting smart contracts with public code repositories like GitHub, Chainlink allows projects to automatically track contributions, verify the fulfillment of predefined conditions, and release payments to contributors. This application streamlines the contribution process, incentivizes open-source development, and ensures that contributors are fairly compensated for their work.

Conclusion

Chainlink significantly impacts blockchain, enhancing security and compliance, especially in authorization and identity. It bridges real-world data with blockchain, ensuring trust and wider adoption. As blockchain evolves, Chainlink's innovations promise a more inclusive digital future. Its key role in securing and streamlining blockchain applications marks a crucial step forward for digital interactions. Chainlink is pivotal for a secure, compliant, and efficient blockchain ecosystem, shaping the future of digital transactions.

If you are interested in utilizing Chainlink or other blockchain-based solutions for your project, please reach out to contact@nextrope.com

Chainlink vs. Avalanche: Exploring the Blockchain Frontier

Karolina

13 Feb 2024
Chainlink vs. Avalanche: Exploring the Blockchain Frontier

Chainlink emerges as the bridge between the real world and the blockchain. On the other side, Avalanche flashes through the blockchain space with a lightning speed platform that promises scalability without compromise. Both are revolutionaries in their own right, yet their paths are markedly different. Chainlink's quest to secure the integrity of off-chain data in a decentralized manner contrasts with Avalanche's mission to redefine blockchain's scalability and usability. But what happens when these paths intersect?

Overview

Chainlink is a decentralized oracle network that plays a critical role in bridging the gap between smart contracts on blockchain networks and real-world data. It enables smart contracts to securely interact with external data.

  • Decentralized Data Oracles. Chainlink's network of decentralized oracles ensures that data fed into smart contracts is accurate and tamper-proof, mitigating risks associated with relying on a single data source.
  • Smart Contract Connectivity to Real-World Data. It facilitates the seamless integration of external data sources, such as financial market data, weather information, and much more, enabling smart contracts to execute based on inputs from the real world.
  • Chainlink VRF (Verifiable Random Function). This feature provides a secure and provably fair source of randomness for blockchain applications, crucial for gaming, NFTs, and any application requiring random number generation.

READ: "What is Chainlink"

What is Avalanche?

Overview

Avalanche is a highly scalable blockchain platform designed for decentralized applications (dApps) and custom blockchain networks. It distinguishes itself with its emphasis on scalability, speed, and eco-friendliness.

Key Features of Avalanche

  • High Throughput and Low Latency. Avalanche boasts a high transaction output rate with low latency, making it an ideal platform for scaling dApps and financial solutions.
  • Eco-friendly Consensus Mechanism. Unlike proof-of-work (PoW) systems that require significant energy expenditure, Avalanche uses a novel consensus mechanism that is energy-efficient, contributing to a more sustainable blockchain ecosystem.
  • Scalability and Interoperability. The platform supports the creation of multiple custom blockchains that can interoperate seamlessly, facilitating a diverse and scalable ecosystem of applications.

READ: "Avalanche’s Investment in Real-World Assets Tokenization"

As blockchain technology continues to evolve, understanding the nuances between different platforms and solutions like Chainlink and Avalanche becomes increasingly important. Here's how these two blockchain giants stack up against each other:

Underlying Technologies and Architectures:

  • Avalanche utilizes a unique consensus protocol known as Avalanche consensus, combining the benefits of classical consensus algorithms with the decentralized nature of blockchains. This protocol allows for high throughput, quick finality, and energy efficiency.
  • Chainlink, on the other hand, is not a blockchain but a decentralized network of nodes that provide data to blockchain networks. It uses a network of independent node operators who are incentivized to provide accurate data to smart contracts.

Consensus Mechanisms:

  • Avalanche employs a Proof of Stake (PoS) model designed to be lightweight and energy-efficient. Validators participate in reaching consensus by staking AVAX tokens, contributing to the network's security and governance.
  • Chainlink does not use a consensus mechanism in the same way a blockchain network like Avalanche does. Instead, it relies on a decentralized network of oracles to validate and relay data, ensuring the integrity of information provided to smart contracts.

Chainlink is best suited for applications that require secure, reliable, and tamper-proof data inputs from the real world. This includes:

Avalanche is optimized for a wide range of blockchain applications needing high throughput, quick finality, and scalable infrastructure, such as:

  • Scalable DeFi platforms and DEXes.
  • Enterprise blockchain solutions.
  • Custom blockchain networks (subnets).

Examples of Real-World Applications and Partnerships:

  • Chainlink has partnered with Google Cloud for cloud data integration and with numerous DeFi platforms like Synthetix and Aave for price feeds and randomness.
  • Avalanche has formed partnerships with Deloitte for enhancing security and speed in disaster relief platforms and with top DeFi protocols to build on its highly scalable network.

Ecosystem and Community

Development Community and Ecosystem Support:

  • Both Chainlink and Avalanche boast robust and active communities. Chainlink's community is highly engaged in developing external adapters and securing data for smart contracts. Avalanche's community focuses on developing dApps and custom blockchain networks.

Tools, Resources, and Support:

  • Chainlink offers extensive documentation, a vibrant developer community, and grants for projects integrating Chainlink's technology.
  • Avalanche provides developers with comprehensive resources, including tutorials, technical documentation, and funding for ecosystem growth through the Avalanche Foundation.

Tokenomics and Market Performance

  • LINK (Chainlink's token) is used to pay for services within the Chainlink network, including data requests to oracles. It incentivizes node operators to provide accurate data.
  • AVAX (Avalanche's token) serves as the native currency within the Avalanche network, used for transaction fees, staking, and governance.
  • In terms of market performance, both LINK and AVAX have shown significant growth and adoption, reflecting their utility and the demand for their respective network's services. However, their performance can vary based on overall market trends, technological advancements, and adoption rates in their specific use cases.

LINK vs AVAX

Potential for Integration

The potential for integration between Chainlink oracles and Avalanche’s blockchain platform is substantial. Chainlink’s decentralized oracles can provide Avalanche-based applications with secure and reliable real-world data, enhancing the functionality and scope of Avalanche’s already fast and scalable blockchain. This integration can benefit a wide range of applications, from DeFi and insurance to gaming and prediction markets, by providing them with the essential data needed to operate effectively and transparently.

Conclusion

Chainlink and Avalanche, while serving distinct purposes within the blockchain ecosystem, demonstrate a powerful synergy when combined. Chainlink’s ability to provide secure, reliable, and decentralized data complements Avalanche’s high-throughput, scalable blockchain platform, enabling developers to build more complex, useful, and transparent applications.

READ ALSO: "Chainlink vs Polkadot"

If you are interested in utilizing Chainlink or other blockchain-based solutions for your project, please reach out to contact@nextrope.com