Hats Finance’s decentralized audit competitions focus on Web3 projects' code bases and provide a unique platform for security experts to participate in a collaborative effort to enhance the security and reliability of blockchain projects. Our competitions leverage the power of the crowd to identify vulnerabilities, mitigate risks, and improve the overall integrity of the Web3 ecosystem.
In essence, skilled auditors and cybersecurity professionals, engage in a competitive environment where they review and analyze the codebases of Web3 protocols' smart contracts. Participants aim to identify potential security vulnerabilities, loopholes, or weaknesses within the code base. Participant submissions are rewarded based on the severity of each issue discovered, for example, with a sliding scale for high, medium, and low severity vulnerabilities. Projects are able to tailor the audit scope, the severity descriptors, and levels of rewards offering them complete control of functionality and execution.
Framing the Problem
Audit competitions, while not necessarily a replacement for traditional audits, can serve as an excellent complement to them or can be particularly effective when applied to code that has already been subject to a high level of internal review.
Web3 protocols commonly face several challenges when it comes to auditing their smart contracts:
- 1.Lengthy Wait Times: Traditional audit processes can take weeks or even months, delaying the launch of important updates or features.
- 2.High Cost with Minimal QA: Auditing services can be prohibitively expensive, often without a corresponding level of quality assurance to justify the expenditure.
- 3.Payment Regardless of Results: Traditionally, payment for audit services is required even if no vulnerabilities are discovered, potentially leading to wasted resources.
- 4.Limited Reviewers: With the traditional audit model, a limited number of individuals or a single team are typically involved in the code review process, which may limit the diversity of thought and potentially overlook vulnerabilities.
Audit competitions offer compelling solutions to these common issues:
- 1.Shorter Audit Cycle Time: By leveraging the power of a crowd of auditors, the audit process can be significantly expedited, reducing the time from discovery to patch.
- 2.Return of QA to Protocol Hands: In an audit competition, quality assurance is decentralized and falls into the hands of the protocol or developers themselves. They have the opportunity to assess submissions, thus allowing for a more hands-on approach to security.
- 3.Payment Based on Findings: Rewards in audit competitions are based on the severity and validity of the vulnerabilities found. This means that if no vulnerabilities are discovered, no payments are required, ensuring that resources are spent effectively.
- 4.The Advantage of Many Eyes: The power of the crowd is harnessed in audit competitions. With more individuals reviewing the code, the likelihood of discovering potential vulnerabilities is significantly increased. This "many eyes" approach fosters diversity of thought and comprehensive code review.
Key Features and Workflow:
Decentralized Platform: The competition takes place on Hats Finance’s decentralized platform built on blockchain technology, ensuring transparency, immutability, and tamper-resistant communication, auditing, and escrow processes.
Submissions: Web3 protocol developers submit their code to the platform for auditing. Code can include smart contracts, decentralized applications (dApps), token contracts, decentralized finance (DeFi) protocols, or any other Web3-related applications.
Audit Process: Participants review the submitted repository, examining the codebase for potential vulnerabilities, security risks, and compliance issues. They conduct manual reviews, employ automated analysis tools, and perform rigorous testing to identify weaknesses.
Vulnerability Reporting: When participants discover vulnerabilities, they report their findings through the platform to the respective competition’s committee through Hats Finance encrypted communication channel. Detailed reports, including vulnerability descriptions, impact assessments, and potential mitigation strategies, are submitted to the protocol developers for consideration.
Evaluation and Rewards: Protocol developers review the submitted vulnerability reports and evaluate their severity and validity. Participants with valid and valuable findings are rewarded based on predefined criteria, which may include factors such as the significance of the vulnerability, the level of detail in the report, and the impact on the protocol's security.
Iterative Improvement: The audit competition encourages an iterative improvement cycle, where developers incorporate the reported vulnerabilities into their codebase, enhancing the overall security and reliability of the Web3 protocol.
Advice to Participants
Here's some advice for audit competition participants:
- 1.Familiarize Yourself with Past Audits: Review projects’ past audits to understand issues that have already been identified and potential submission opportunities.
- 2.Understand Scope: Review excluded and already known issues to ensure you don’t do redundant work.
- 3.Be Swift: You've got to be the first one to submit an issue to bag a bounty for it. Speed counts!
- 4.Utilize the Dapp: Make your submissions via our dapp, specifically in the audit competition vault.
- 5.Demonstrate and Propose: Each submission should illustrate the problem, contain a POC, and if possible, offer a solution.
Further Benefits of Audit Competitions:
Enhanced Security: The competition leverages the collective expertise of auditors to identify vulnerabilities, significantly reducing the risk of potential exploits and hacks within Web3 smart contracts.
Crowd Wisdom: By harnessing the power of a diverse group of auditors, the competition benefits from varied perspectives, expertise, and methodologies, resulting in comprehensive audits that go beyond individual efforts.
Protocol Developer Empowerment: Developers gain valuable insights and actionable feedback on their smart contracts, enabling them to address vulnerabilities and strengthen the security of their protocols.
Industry Best Practices: The competition promotes the adoption of industry best practices in smart contract development, fostering a culture of security and resilience within the Web3 ecosystem.
Continuous Learning and Reputation Growth: Participants continuously enhance their auditing skills, expand their knowledge of Web3 protocols, and contribute to the overall advancement of blockchain security practices. Successful submitters also have the opportunity to gain recognition for their contributions.