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.


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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Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.

source: https://www.canva.com/design/DAFDTNKsIJs/8Ky9EoJJI7p98qKLIu2XNw/view#7

Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

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.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.

What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained


18 Mar 2024
What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Enter Berachain: a high-performance, EVM-compatible blockchain that is set to redefine the landscape of decentralized applications (dApps) and blockchain services. Built on the innovative Proof-of-Liquidity consensus and leveraging the robust Polaris framework alongside the CometBFT consensus engine, Berachain is poised to offer an unprecedented blend of efficiency, security, and user-centric benefits. Let's dive into what makes it a groundbreaking development in the blockchain ecosystem.

What is Berachain?


Berachain is an EVM-compatible Layer 1 (L1) blockchain that stands out through its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. Designed to address the critical challenges faced by decentralized networks. It introduces a cutting-edge approach to blockchain governance and operations.

Key Features

  • High-performance Capabilities. Berachain is engineered for speed and scalability, catering to the growing demand for efficient blockchain solutions.
  • EVM Compatibility. It supports all Ethereum tooling, operations, and smart contract languages, making it a seamless transition for developers and projects from the Ethereum ecosystem.
  • Proof-of-Liquidity.This novel consensus mechanism focuses on building liquidity, decentralizing stake, and aligning the interests of validators and protocol developers.


EVM-Compatible vs EVM-Equivalent


EVM compatibility means a blockchain can interact with Ethereum's ecosystem to some extent. It can interact supporting its smart contracts and tools but not replicating the entire EVM environment.


An EVM-equivalent blockchain, on the other hand, aims to fully replicate Ethereum's environment. It ensures complete compatibility and a smooth transition for developers and users alike.

Berachain's Position

Berachain can be considered an "EVM-equivalent-plus" blockchain. It supports all Ethereum operations, tooling, and additional functionalities that optimize for its unique Proof-of-Liquidity and abstracted use cases.

Berachain Modular First Approach

At the heart of Berachain's development philosophy is the Polaris EVM framework. It's a testament to the blockchain's commitment to modularity and flexibility. This approach allows for the easy separation of the EVM runtime layer, ensuring that Berachain can adapt and evolve without compromising on performance or security.

Proof Of Liquidity Overview

High-Level Model Objectives

  • Systemically Build Liquidity. By enhancing trading efficiency, price stability, and network growth, Berachain aims to foster a thriving ecosystem of decentralized applications.
  • Solve Stake Centralization. The PoL consensus works to distribute stake more evenly across the network, preventing monopolization and ensuring a decentralized, secure blockchain.
  • Align Protocols and Validators. Berachain encourages a symbiotic relationship between validators and the broader protocol ecosystem.

Proof-of-Liquidity vs Proof-of-Stake

Unlike traditional Proof of Stake (PoS), which often leads to stake centralization and reduced liquidity, Proof of Liquidity (PoL) introduces mechanisms to incentivize liquidity provision and ensure a fairer, more decentralized network. Berachain separates the governance token (BGT) from the chain's gas token (BERA) and incentives liquidity through BEX pools. Berachain's PoL aims to overcome the limitations of PoS, fostering a more secure and user-centric blockchain.

Berachain EVM and Modular Approach

Polaris EVM

Polaris EVM is the cornerstone of Berachain's EVM compatibility, offering developers an enhanced environment for smart contract execution that includes stateful precompiles and custom modules. This framework ensures that Berachain not only meets but exceeds the capabilities of the traditional Ethereum Virtual Machine.


The CometBFT consensus engine underpins Berachain's network, providing a secure and efficient mechanism for transaction verification and block production. By leveraging the principles of Byzantine fault tolerance (BFT), CometBFT ensures the integrity and resilience of the Berachain blockchain.


Berachain represents a significant leap forward in blockchain technology, combining the best of Ethereum's ecosystem with innovative consensus mechanisms and a modular development approach. As the blockchain landscape continues to evolve, Berachain stands out as a promising platform for developers, users, and validators alike, offering a scalable, efficient, and inclusive environment for decentralized applications and services.


For those interested in exploring further, a wealth of resources is available, including the Berachain documentation, GitHub repository, and community forums. It offers a compelling vision for the future of blockchain technology, marked by efficiency, security, and community-driven innovation.


How is Berachain different?

  • It integrates Proof-of-Liquidity to address stake centralization and enhance liquidity, setting it apart from other blockchains.

Is Berachain EVM-compatible?

  • Yes, it supports Ethereum's tooling and smart contract languages, facilitating easy migration of dApps.

Can it handle high transaction volumes?

  • Yes, thanks to the Polaris framework and CometBFT consensus engine, it's built for scalability and high throughput.