5 Reasons Why DeFi Projects NEED a Smart Contract Audit

Smart contract audits are crucial in the decentralized finance (DeFi) ecosystem. Every DeFi project needs an audit before deployment to ensure it’s safe and free from operational bugs. This article will explain why auditing a decentralized project is required.

What is a smart contract audit?

It is an extensive review of a contract’s code base to identify security vulnerabilities and operational issues. It involves experts diving deep into the contract’s code base to detect security flaws hackers could exploit and identify potential opportunities to improve the smart contract’s performance.

Whether you’re an amateur or extremely skilled developer, your contract needs an independent review to help it stay secure and efficient. No matter how good you are at programming, you can make mistakes that hackers could exploit to drain user funds. An independent audit is needed to examine your codebase to identify and fix such mistakes.

Five reasons why you need a contract audit

These are the main reasons to seek a smart contract audit:

1. Protecting user funds

DeFi allows people to transact in large volumes without a centralized third party. This decentralization is the main appeal but also poses a disadvantage– hackers usually target DeFi apps to steal funds because they know transactions can hardly be reversed. 

Before deployment, you must audit your decentralized application to uncover and rectify any vulnerabilities that could be exploited to steal funds. Even a minor oversight can allow a malicious actor to siphon user funds. By engaging experienced auditors, you can leverage their expertise to identify errors that may not be immediately apparent to an average developer. This third-party, independent perspective is instrumental in maintaining the security of your contract and preventing potential issues arising from user fund loss.

2. Compliance

An independent audit is often a prerequisite for decentralized apps to work as needed. For instance, many exchanges require any token listing on their platform to be thoroughly audited with clear proof. Some jurisdictions also require smart contracts to be audited before being promoted to residents.

Auditors can also help you identify potential legal headaches with your DeFi project, and you can seek further help to rectify such issues before deployment.

3. Credibility

Audits have become the clear standard for maintaining credibility in the blockchain industry. Many users won’t touch unaudited projects with a 10-foot pole, and many exchanges will refuse listings. Blockchain platforms will also decline integrations with unaudited projects. 

An audit signals to users, investors, and partners that you value their safety and trust. It helps your blockchain platform stay credible and attract different stakeholders to help it grow.

4. To improve performance

Audits aren’t only about security. Auditors also examine your decentralized app’s codebase to identify ways to improve its performance. For example, the auditing team can look at reducing gas fees for transactions on your platform. It can consider how to increase transaction speed to keep users happy.

Audits help your contract perform reliably and efficiently, which in turn helps you attract and retain users to your blockchain project.     

5. Avoiding costly problems

It’s better to examine your DeFi project in its early stages, detecting and fixing any problems you detect. If you wait until after deployment to review your project, you might identify bugs that require the whole project to be paused to fix them. Such a situation could cost you much money and anger your users. Early audits help you avoid costly mistakes later on.