Why smart contract code audit is crucial for blockchain projects?

A smart contract security audit is basically identifying vulnerabilities in a project’s code and fixing them using various methods or tools as the reviewing company sees fit.

The idea is to ensure that there are no mistakes that could jeopardize the safety of platform users' funds.

In addition to being able to ensure the security of assets on the Ethereum network where most DeFi protocols operate, and at the same time ensure the normal work of its blockchain system, more relevant benefits of security audits are becoming more and more obvious.

Businesses in the crypto space have undergone some subtle but fundamental changes over time. Gone are the days when anyone could start a crypto project plan and implement it. Of course, this started with an Initial Coin Offering (ICO).

The intent of this blockchain-based funding mechanism is groundbreaking. But the sheer number of scam projects it spawned was so egregious in 2017 that a Satis Group survey suggested that around 80 percent of crypto projects at the time were scams. Over time, there have been reports of repeated scams, although the numbers appear to have diminished.

Americans lost more than $80 million to crypto-related scams in the fall of 2019 and the subsequent 12-month period, the report said. Earlier in 2022, scammers stole $14 billion worth of cryptocurrencies from investors in 2021 and 2020, as seen in blockchain data firm Chainalysis' Cryptocurrency Crime Report 2022. $7.8 billion and “rug pulling” — a new form of scam common in decentralized finance (DeFi) in which developers of crypto projects disappear with users’ funds — is key.

So, be aware that fraudulent projects rarely do security audits of their smart contracts.

Ensuring that the security of the platform is in a more stringent state - free from attack, risk-free, protecting the value of transactions or stores, has become somewhat of a norm. Flaws in smart contract code were highlighted as the main reason most DeFi protocols were hacked.

As stated earlier, a project website, a (not so good) well-crafted white paper, and some profile images of known faces in the industry are no longer enough to save blockchain projects today. Instead, there must be more about the project's proposition to existing problems, use cases, team profiles, and the community (including advisors) built around it.

Now, there is also focus on the security of the platform and how its systems can be strengthened to provide investors and users with a sense of security. Auditing helps determine what needs to be done to get the right balance across all stakeholders.

Even many would-be investors are no longer chasing projects that can turn around their earnings overnight, but chasing projects that deserve their approval.

Since new, serious projects cannot operate in isolation, they must rely on other partners with forward-looking initiatives, especially those that have been around for quite some time. This collaboration, which can cut across various dimensions, is often to help them sell their ideas faster and gain recognition in the field they offer. To be able to cross this bridge, they must continually demonstrate some form of credible stance, build trust as they work to open up their agenda through a carefully planned roadmap, and follow through carefully.

This is why it is always recommended that any party to such a partnership do serious due diligence at an early stage. It helps determine trustworthiness of each other and summarizes how most trustworthiness issues that may arise over time were resolved in the beginning. It boosts confidence in the project's ability not only to succeed, but to remain well-positioned in the industry over the long term.

With a security audit in place, there is a good chance that these credibility issues will be resolved. It helps illustrate the capabilities of real projects that have started to find success with their proposed use cases, built a team to implement the idea, and took months, if not years, to reach the top.

If it is about a token sale, questions about the code audit of the project will definitely be raised. In some cases, potential partners will insist on an audit.

Credibility is at the core. No matter how unusual this requirement may seem, code audits are for mutual benefit, as credibility increases the potential of each party in the public eye.

This aspect is still developing: but in some cases, in addition to ongoing security audits, some potential collaborative projects may need to know and have documentation of the country of legal entity / company registration of the current encryption project. Other pioneering projects that want to work with you may want to have evidence of project registration to ensure their legitimacy.