Unlock the Power of Smart Contracts with a Security Audit – Here’s Why!

Paulina Lewandowska

29 Dec 2022
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Smart contracts are secure, self-executing digital contracts. They are being used more frequently to manage a variety of tasks, such as money transfers and property transfers. Smart contracts have a lot of advantages, but they also carry a lot of risk. Therefore, before deployment, a smart contract audit is essential. In this article, we'll go through why it's important to audit smart contracts, how to choose a smart contract auditor, and how to streamline the auditing procedure.

Introduction to Smart Contracts

Smart contracts have grown in popularity as a safe and open way to manage agreements and transactions. Smart contracts are digital contracts that are maintained on a blockchain and executed automatically when specific circumstances are satisfied. These agreements can be used for a variety of transactions, including as the trading of goods and services as well as the transferring of rights and ownership. Although smart contracts provide a number of advantages, including security, transparency, and immutability, it is essential to carry out an audit before deploying them in order to guarantee their dependability and security.

Why is Auditing Smart Contracts Important

Blockchain smart contracts must be audited in order to find and fix any potential flaws or mistakes before they are put into use. A smart contract that has been stored on the blockchain cannot be changed after that point because it is a decentralized and immutable record. Any defects or weaknesses in a smart contract could have severe repercussions, including monetary losses, legal troubles, or reputational harm. Therefore, before a smart contract is implemented, it must undergo an audit to confirm its security and dependability. In order to guarantee smart contracts' ongoing security and dependability when changes are made, it is also advisable to audit them frequently.

What is a Smart Contract Audit?

An audit of a smart contract's code is done systematically to look for any vulnerabilities or defects that might exist. A certified smart contract auditor who is proficient in the programming language used to create the contract does this process. In order to find any problems like wrong grammar, faulty logic, or insufficient security measures, the auditor thoroughly examines the code line by line during the audit. The audit also seeks to locate any malware or other potential security risks in the contract. The auditor then submits a report detailing their findings and recommendations for improvement.

Benefits of a Smart Contract Audit

The advantages of auditing smart contracts are numerous. It aids in making sure the contract is trustworthy and safe, which can lower the chance of monetary losses, legal problems, and reputational harm. Additionally, it assists in ensuring that the contract complies with current laws and norms.

Smart contract auditing enables the detection of possible problems before they have a chance to do much harm. This can assist in lowering the price of any necessary repairs or modifications. As any possible problems may be rapidly detected and fixed, it can also aid in reducing the amount of time required to deploy the contract.

What to Look for in a Smart Contract Auditor

Look for someone with experience and expertise when choosing a smart contract auditor. The auditor should be knowledgeable with the best practices for auditing smart contracts and have a thorough understanding of the coding language used to develop the contract.

Additionally, the auditor needs to be familiar with the particular platform that was used to draft the contract. For instance, the auditor needs to be familiar with the Ethereum Virtual Machine if you're using it. This will help to guarantee that the audit is thorough and correct.

The Process of Auditing Smart Contracts

Smart contract auditing often entails a more in-depth and exhaustive examination of the code. The following steps may also be included in the process:

  1. Setting up a testing environment: In order to deploy and test the smart contract, the auditor must set up a testing environment. Installing the required software and equipment, such as a local blockchain network or an emulator, may be required to accomplish this.
  2. Examining the overall structure of the code: The auditor will examine the code's overall structure to make sure it is clear and ordered. They will also look for any coding best practices or standards that have been adhered to.
  3. Checking for any vulnerabilities in the code: The auditor will carefully study the code to look for any possible flaws or vulnerabilities that might be taken advantage of. This involves keeping an eye out for unsafe coding procedures like the usage of unsecure libraries or improper input validation.
  4. The contract will be put through its paces by the auditor to make sure it performs as planned and that all of its features and functions are operationally sound. Writing test cases or scenarios to put the functionality of the contract to the test may be required.
  5. Making recommendations: After the audit is finished, the auditor will deliver a report with their conclusions and suggestions. Any concerns that were discovered during the audit will be described in this report along with recommendations for how to deal with them. The report might also make suggestions for enhancing the contract's general stability and security.

Best Practices for Auditing Smart Contracts

In order to guarantee the security and dependability of blockchain-based applications, smart contracts must be audited. When auditing smart contracts, it's crucial to adhere to established practices for the best outcomes.

Utilizing a trustworthy auditor with experience and understanding is a crucial best practice. A competent auditor who is well-versed in smart contracts would be able to see possible problems and make insightful recommendations.

Making a thorough audit strategy before starting the audit is another crucial best practice. The audit's scope, the exact sections of the code that will be examined, and any testing that will take place should all be specified in this plan.

It's crucial to examine the code line by line during the audit to find any potential problems. To do this, you might check for erroneous logic, poor syntax, or missing security precautions. The auditor should also search for any potentially harmful code or security issues.

The auditor should deliver a thorough report detailing their findings and suggestions after the audit is finished. Any concerns that were discovered during the audit should be described in this report along with recommendations for how to deal with them. Additionally, suggestions for enhancing the contract's general stability and security should be included in the report.

It's critical to frequently check on the contract to make sure it's safe and trustworthy. To make sure the code is current with the most recent best practices and security precautions, this may entail running tests or reviewing it frequently.

Conclusion

An essential step in assuring the security and dependability of these contracts is smart contract audits. It is feasible to prevent damage and lower the cost of repairs or modifications by identifying potential weaknesses or vulnerabilities. It's crucial to take into account a smart contract auditor's level of experience and familiarity with the applicable platform when making your decision.

Smart contract audits are another way to make sure that laws and standards are being followed. By streamlining the deployment procedure, time and resources may be saved. Using our AI auditing platform, Nextrope provides effective and thorough smart contract security assessments. To secure the security and dependability of your smart contracts, get in touch with us right now.

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!