5 MAJOR SMART CONTRACT VULNERABILITIES ON BLOCKCHAIN.
Smart contracts, which are self-executing contracts with the agreement terms explicitly put into code, are critical components of blockchain technology. They allow automated transactions and agreements to take place without the need for intermediaries, bringing transparency, efficiency, and trust to various decentralized apps (DApps) and blockchain ecosystems. However, smart contracts are not immune to weaknesses, and knowing these vulnerabilities is critical for both developers and users seeking to secure the security and integrity of blockchain-based systems.
Let’s take a look at the five major vulnerabilities of smart contracts commonly encountered in blockchain environment: The ones that cause millions of dollars in financial market losses.
Reentrancy Attacks
Reentrancy is one of the most well-known and destructive vulnerabilities in smart contracts. It occurs when a contract’s function can be called multiple times before the previous execution is complete. In essence, reentrancy allows an attacker to repeatedly enter the same function and manipulate the contract’s state or drain its funds. This vulnerability arises due to the design of the Ethereum Virtual Machine (EVM), which allows functions to be called recursively.
The infamous DAO (Decentralized Autonomous Organization) attack in 2016 highlighted the severity of reentrancy vulnerabilities. Hackers exploited a reentrancy vulnerability in the DAO smart contract to siphon off approximately $60 million worth of Ether. To mitigate reentrancy vulnerabilities, developers must ensure that state changes are executed before making external calls and use mechanisms such as mutex locks to prevent recursive function calls.
Learn more about reentrancy only at link (insert link to re-entry research paper by Usman Tahir from publications here)
- Unchecked External Calls:
Smart contracts often interact with external contracts or oracles to fetch data or execute functions. However, if these external calls are not properly validated or checked for malicious behavior, they can introduce significant vulnerabilities. Attackers can exploit unchecked external calls to manipulate the contract’s state or execute unauthorized actions, leading to financial losses or system compromise.
To mitigate this vulnerability, developers should implement strict validation and error-handling mechanisms when interacting with external contracts. Additionally, employing standard security patterns such as the “checks-effects-interactions” pattern can help prevent reentrancy and other related attacks.
- Integer Overflow/Underflow:
Smart contracts handle numeric values, and arithmetic operations on these values can lead to overflow or underflow vulnerabilities. An overflow occurs when a numeric value exceeds its maximum limit, while an underflow occurs when it goes below its minimum limit. Attackers can exploit these vulnerabilities to manipulate balances, trigger unexpected behaviors, or bypass access controls.
To prevent integer overflow/underflow vulnerabilities, developers should use safe arithmetic libraries or implement checks to ensure that arithmetic operations do not result in unintended outcomes. Additionally, utilizing fixed-size integer types and employing defensive programming techniques can help mitigate the risk of these vulnerabilities.
- Denial of Service (DoS):
Smart contracts that rely on loops or extensive computations are susceptible to Denial of Service (DoS) attacks. Attackers can exploit this vulnerability by sending transactions that consume excessive gas or computational resources, causing the contract to become unresponsive or enter an infinite loop. This can disrupt the functionality of the contract and degrade the performance of the blockchain network.
To mitigate DoS vulnerabilities, developers should carefully design smart contracts to limit gas consumption and prevent unbounded loops or recursive function calls. Additionally, implementing gas limits and using gas-efficient algorithms can help minimize the impact of DoS attacks.
- Front-Running (Transection order dependence):
Front-running is a type of attack where an attacker observes pending transactions on the blockchain and strategically places their own transaction to exploit price discrepancies or gain an unfair advantage. In the context of smart contracts, front-running vulnerabilities can arise in decentralized exchanges (DEXs) or token swaps, where attackers manipulate transaction order to profit from arbitrage opportunities.
To address front-running vulnerabilities, developers can implement techniques such as commit-reveal schemes, where sensitive information is revealed only after transactions are committed to the blockchain. Additionally, utilizing decentralized order matching mechanisms and optimizing transaction execution can help mitigate the risk of front-running attacks.
CONCLUSION
So, in this blog we disccus the smart contract vulnerabilities that pose significant risks to blockchain ecosystems, leading to financial losses, system compromise, and loss of trust.This will definitely help researchers and smart contract developers.
Go Ahead with us on our journey to learn more about the vulnerabilities of smart contracts and their solutions. If you are a researcher or developer, you should visit our recent publications on vulnerabilities in smart contracts.(ADD HERE LINK)