What Is an Audit?

An audit is a process where developers inspect the underlying code and/or algorithm that compose systems and applications, allowing them to spot potential bugs or points of failure before deployment. Audits are generally undertaken by third parties, which helps guarantee that the procedure is done in an unbiased and effective manner. 

Auditing has become a common practice within the blockchain space, with numerous projects relying on the technique to ensure the security of their decentralized protocols’ smart contracts and give their users or token holders added peace of mind.

There are two ways to audit code: manual and automatic. Manual analysis is the most effective method of searching for coding errors. However, it takes more time and requires a mid-size development team to execute. Automatic code analysis enables quick but effective code assessment. While the latter is somewhat preferred by traditional businesses, manual code analysis is crucial for crypto projects since launching with undiscovered vulnerabilities could spell millions of lost funds, especially for DeFi projects.

A complete audit of a smart contract often consists of five important steps:

1. Agreeing on a specification;
2. Running tests;
3. Running automated symbolic execution tools;
4. Manual code analysis;
5. Report.