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Audit Competitions

Overview
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 audit competitions are time-sensitive events where a community of security experts, including auditors and white-hat hackers, engage in a collaborative yet competitive environment to identify and report vulnerabilities in smart contracts and DeFi protocols. This model leverages the collective expertise and insight of a diverse group of security professionals to enhance the security position of blockchain projects.
THE GOAL
The primary goal of an audit competition at Hats Finance is to ensure the robust security of DeFi protocols by uncovering potential vulnerabilities before they can be exploited maliciously. These competitions are designed to bring out the best in the auditing community, fostering a spirit of collaboration and innovation while ensuring a high standard of security for participating protocols.
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. 1.
    Lengthy Wait Times: Traditional audit processes can take weeks or even months, delaying the launch of important updates or features.
  2. 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. 3.
    Payment Regardless of Results: Traditionally, payment for audit services is required even if no vulnerabilities are discovered, potentially leading to wasted resources.
  4. 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. 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. 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. 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. 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.
HOW HATS FINANCE AUDIT COMPETITIONS WORK
Initiation: Protocols begin by meeting with our team to assess their needs and match them with the right product. From here the protocol submits their code and we collaboratively define the scope, rules, and potential rewards for participants. At this point, the protocol will use our vault creator to set up their competition vault creating reassurance for all potential participants that all potential rewards are on-chain and ready to be deployed. When this process is completed, we move into launch mode.
Pre-Competition Launch: In the time leading up to competitions beginning, we coordinate with protocols to ensure a community of security researchers are ready to get their eyes on code on day 1.
Participation: Security researchers and auditors from our community then scrutinize the submitted code, employing a variety of techniques to identify vulnerabilities. This could range from manual code reviews to automated testing.
Submission of Findings: Participants submit their findings directly on-chain, ensuring transparency and integrity in the reporting process. This unique approach allows for an immutable record of submissions.
Review and Reward: Submissions are carefully reviewed, with an emphasis on the quality and impact of the findings. Rewards are distributed based on the severity and uniqueness of the vulnerabilities uncovered. Hats Finance's model ensures that only the first unique submission for each issue is rewarded, reducing redundant work and enhancing the efficiency of the competition. If a dispute arises in relation to the validity or severity of a submission, participants can choose to enter impartial arbitration in order to resolve the issue.
Continuous Improvement: During and post-competition, the results are used by protocols to improve their security measures. This ensures protocols are ready to confidently deploy their reviewed and amended code in the shortest amount of time possible. Hats Finance also gathers insights from each competition to refine and enhance future events.
KEY BENEFITS OF PARTICIPATING
Competitive Rewards: Hats unique pay-for-results and low fee structure ensures successful participants can receive fair and substantial incentives for contributions. Our fully on-chain functionality ensures fast payouts for valid vulnerabilities.
Transparency and Trust: Fully on-chain submission and review process for maximum transparency.
Collaborative Expertise and Learning: Leverage the collective knowledge and skills of a diverse community of auditors in order to grow your own capabilities as a security researcher.
GET INVOLVED
Whether you are a seasoned auditor or an aspiring white-hat hacker, Hats Finance audit competitions offer a platform to showcase your skills, contribute to the security of the Web3 ecosystem, and earn rewards for your valuable insights. Join our community and participate in upcoming audit competitions to play a pivotal role in shaping the future of DeFi security.