With the progression of DeFi transactions over the past year, there have been several illegitimate projects happening like the boom of the 2017 ICO. For example, hacking of Harvest Finance, loan exploit of Value DeFi, and selling of development funds of SushiSwap causing the market to crash. The DeFi transaction projects happen on the Ethereum blockchain where the vulnerabilities of the network are causing frauds and hacks.
Security Required For Ethereum DeFi Transactions
Smart contracts powering Ethereum have security issues and projects worth around billion dollars are not being audited beforehand. Tom Lindeman, a veteran researcher, Microsoft stated that no good techniques are available to check before a transaction whether a contract seems secure or not.No system to check smart contract security. Lindeman, a member of ETA talked about their aims as setting security standards for transactions of smart contracts on the blockchain.
Registry System Checking On Smart Contracts
The Ethereum Trust project has joined hands with ETA for checking vulnerabilities. With the Ethereum network maturing, they are looking to solve problems regarding Ethereum’s DeFi transactions. There would be a registry system to create greater awareness to differentiate and classify contracts that have undergone rigorous security protocols. They are working on defining the requirements that term a smart contract as secure, said Burnett. Pierre-Alan Mouy mentioned to CoinTelegraph about the three-level validation process. Level one being automation and the second and third level being manual audits.
Level one will be done by an automated scanning tool that is AI-powered for checking a certain set of protocols which are yet to be defined.
In level two an individual will conduct a security audit. The audit report is to be reviewed by a working group.
Level three is the formal process of verification via written test cases and additional specifications.
After undergoing the three steps, the registry system will give a rating level to the smart contracts before the tokens get listed.
Secured Smart Contracts Gaining More Interest
The project has sparked interest among Ethereum users who are interested in yield farming.PWC has also shown interest in this system for providing contract ratings. Burnett thinks that while Ethereum 2.0 happens and the Ethereum ecosystem moves forward there will be more interest in smart contracts. He mentioned the Baseline Protocol in this regard.
While innovative, the ETA and EthTrust project are not tackling these challenges as the first one to do so. Quantstamp has been performing security checks and contract audits for blockchain firms, such as eToro and Binance since 2017. They are also working on the Polkadot blockchain.
Not only security firms but companies are also using artificial intelligence for creating digital services and leveraging AI to enhance performance and security. Jakub Kobeldys, Lead developer, Vaiot mentioned to CoinTelegraph that no AI can fully protect the system but the tech aids developers massively.