Understanding Business Logic

For security researchers embarking on the audit of smart contracts, comprehending the business logic and the intended interactions within and between contracts is paramount. This foundational understanding not only guides the audit process but also ensures that vulnerabilities are identified in the context of how they might be exploited to disrupt the contract’s intended functionality. A strategic approach for grasping the business logic behind smart contracts, a crucial first step in conducting a thorough and effective security audit, is a must.

Business Logic and Informational Review

The audit begins with a deep dive into the contract’s purpose, design, and operational context. Security researchers must immerse themselves in the contract’s ecosystem to fully appreciate the nuances of its functionality and the architecture of the protocol it supports. This phase encompasses several key activities:

Review of Documentation

Comprehensive documentation is invaluable for understanding a project’s scope, intended functionality, and architectural blueprint. Security researchers should meticulously review all available documentation, including whitepapers, technical specifications, and developer comments within the code. This review sheds light on the expected behavior of the contract and any special conditions or edge cases that the developers anticipated.

Engagement with the Development Team

Direct communication with the development team can clarify ambiguities and highlight areas of concern that may warrant closer scrutiny. Researchers should inquire about any known issues, challenges faced during development, and areas where the team has security concerns. This dialogue can also reveal the rationale behind specific design decisions that may impact security.

Analysis of Previous Audits

Previous audit reports are a treasure trove of insight, offering perspectives from other security professionals on the contract’s vulnerabilities and the measures taken to address them. Researchers should review these reports and the development team’s responses to understand how past issues were remedied and whether any unresolved vulnerabilities persist.

Tracking Codebase and Documentation Updates

Identifying recent changes to the codebase and documentation is critical, especially updates responding to previous audits or introducing new features. These areas often represent a higher risk for vulnerabilities, either because they have not been thoroughly vetted or because changes might introduce inconsistencies with the existing security model.

Initial Code Evaluation

An initial pass through the code helps researchers familiarize themselves with the contract’s structure and major functional components. This step is not about identifying vulnerabilities but rather about mapping out the contract’s logic, identifying key functions, and understanding how different components interact with one another and with external contracts.

Developing a Comprehensive Understanding

Achieving a comprehensive understanding of the business logic involves synthesizing information from the documentation, codebase, and interactions with the development team. Researchers should strive to answer several key questions during this phase:

  • What are the contract’s primary objectives and functions?
  • How do users and external contracts interact with this contract?
  • What are the critical paths and flows of value within the contract?
  • Are there any external dependencies or oracle calls, and how do they impact the contract’s behavior?
  • What are the fail-safes, and how does the contract handle exceptions or unexpected inputs?
  • What are the access control mechanisms, and how are they implemented?
  • What are the upgrade mechanisms, and how are they implemented?
  • What are the contract’s dependencies on external libraries or standards, and how are they integrated?


Understanding the business logic is the cornerstone of any smart contract audit, providing the context necessary to identify vulnerabilities that could be exploited maliciously. By thoroughly reviewing documentation, engaging with the development team, analyzing previous audits, and conducting an initial code evaluation, security researchers can build a solid foundation for the subsequent phases of the audit process. This deep dive into the contract’s intended functionality and architecture is indispensable for uncovering vulnerabilities that could compromise the contract’s integrity, security, and reliability.

The range of vulnerabilities that can occur in smart contracts is vast. From re-entrancy and unchecked return values to integer overflows and denial-of-service attacks, identifying these exploits takes a hacker’s mindset and a large amount of knowledge. In this section we lay out process of identifying exploits in smart contracts, covering common vulnerabilities and practices for detection and prevention.

The Process of Identifying Exploits

Identifying exploits in smart contracts involves a comprehensive approach that encompasses static and dynamic analysis, manual review, and automated tools. We addressed this in brief in our section on auditing methodology. The following digs deeper into some of the techniques for conducting a search for and detecting vulnerabilities and ensuring the security of Ethereum smart contracts:

Business Logic and Informational Review:

  • Deeply understand the contract’s functionality and architecture of the protocol is essential. This includes understanding the contract’s scope, the intended functionality, and the architecture of the protocol.
  • Review the documentation to understand the project’s scope, functionality, and architecture.
  • Review any concerns raised by the development team
  • Become familiar with previous audits and the responses to those audits
  • Identify recent updates to the codebase and documentation, particularly in response to previous audits and new code that has not been previously audited