8 Smart Contract Security Threats

Smart contract threats

Smart contracts play a crucial role in blockchain technology and its various applications in industries such as finance, supply chain management, art, music, and IoT networks. Despite their significance, smart contracts are vulnerable to security threats as their codes are often transparent, making them easy targets for malicious agents. This has led to substantial revenue losses, with an estimated $1 billion lost or stolen due to smart contract vulnerabilities. This includes high-profile cases like the DAO hack, the Parity multi-sig wallet hack, and the Parity frozen wallet issue.

Given the risks involved, developers need to focus on creating secure, reliable, and resilient smart contracts. This helps to protect against vulnerabilities and reduce the likelihood of incidents. It’s crucial to have a thorough understanding of smart contract security, how it works, and the available security tools.

What is a smart contract in detail?

A smart contract is a computer program that automatically executes the terms of an agreement when certain predetermined conditions are met. It operates on a blockchain network, providing a secure, transparent, and tamper-proof platform for executing the terms of a contract. The contract is written in code, typically in a high-level programming language, and is stored and replicated on the blockchain.

Smart contracts have the potential to revolutionize many industries by automating processes, reducing the need for intermediaries, and increasing transparency. When a user initiates a transaction, the terms of the agreement contained in the smart contract are automatically executed. This includes the transfer of assets, such as cryptocurrencies, and the enforcement of the agreement without the need for intermediaries. The code and the transactions are publicly accessible, providing a clear audit trail and reducing the possibility of fraud.

In conclusion, smart contracts offer a secure, transparent, and tamper-proof platform for executing agreements between parties. They have the potential to streamline processes, reduce the need for intermediaries, and increase trust in transactions.

The working mechanism of smart contracts

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained within it exist on a blockchain network and are secured by cryptography. The rules and regulations of the agreement between parties are automatically enforced by the smart contract, and the transactions are executed only when the set conditions are met. The working mechanism of a smart contract includes the following steps:

  1. A user initiates a transaction and sends it to the blockchain network.
  2. The transaction is verified by the network’s nodes to ensure its validity.
  3. Once the transaction is verified, the smart contract executes automatically and the terms of the agreement are fulfilled, such as transferring ownership of assets or triggering a payment.
  4. The result of the transaction is recorded on the blockchain, making it tamper-proof and unalterable.

In summary, smart contracts automate the execution of transactions and ensure that the terms of the agreement are met without the need for intermediaries.

Smart contract security in detail

Smart contract security refers to a set of practices and technologies aimed at ensuring the secure execution of self-executing computer programs known as smart contracts. It involves safeguarding the smart contract against various security risks, such as unauthorized access, malicious attacks, coding errors, and other vulnerabilities. The following are some of the key aspects of smart contract security:

  1. Access control: Ensuring that only authorized users can access and interact with the smart contract.
  2. Code security: Conducting security audits to identify and fix vulnerabilities in the code and ensuring that the code is secure, reliable, and bug-free.
  3. Data confidentiality: Protecting the data stored in the smart contract from unauthorized access or exposure.
  4. Tamper resistance: Ensuring that the smart contract cannot be altered or manipulated by unauthorized parties.
  5. Resilience: Designing the smart contract to be able to handle and recover from failures or security breaches.
  6. Compliance: Ensuring that the smart contract adheres to relevant legal and regulatory requirements.

In summary, smart contract security involves taking a comprehensive approach to protecting the smart contract and its underlying data and systems from various security risks and vulnerabilities.

Prevailing risks in smart contracts’ security in details

Smart contracts, being self-executing computer programs that run on a blockchain network, are exposed to several security risks and vulnerabilities. Some of the most common security risks associated with smart contracts include:

1.Oracle manipulation

Oracle manipulation refers to a type of security risk in which a malicious actor modifies or falsifies data inputs to a smart contract, thus manipulating the outcome of the contract’s execution. This can be done by tampering with the oracle, which is the source of external data that is fed into the smart contract. As a result, the smart contract may execute in a manner that is unintended or favorable to the attacker, leading to unintended consequences such as financial losses, data breaches, or other forms of harm. To prevent oracle manipulation, smart contracts must be designed and implemented with secure data sources and proper data validation mechanisms, and security measures must be put in place to detect and prevent malicious activities.

2.Reentrancy attack

A reentrancy attack is a security vulnerability that can occur in smart contracts, where an attacker repeatedly calls a function in a smart contract before the function has completed its execution. This allows the attacker to drain the contract’s balance by repeatedly executing the function and withdrawing funds each time. The attacker can manipulate the state of the contract to their advantage and cause unexpected or undesirable outcomes, leading to loss of funds or unauthorized access. To prevent this, smart contract developers need to consider potential reentrancy attacks and implement proper security measures, such as using mutex locks or checking the contract’s state before executing a function.


Frontrunning is a type of attack on a blockchain network that exploits the inherent delay in broadcasting transactions to the network. It occurs when a malicious actor intercepts a high-value transaction, executes the transaction before it, and then forwards the original transaction to the network. The malicious actor profits by using their prior knowledge of the high-value transaction to buy or sell assets at a more favorable price before the original transaction is processed. This type of attack is possible in decentralized systems because the order of transactions is determined by network consensus, not by a central authority. To prevent frontrunning attacks, some blockchain networks have implemented mechanisms such as randomization, transaction ordering, and transaction batching.

4.Timestamp dependence

A timestamp dependence attack is a security vulnerability in smart contracts that arises due to the reliance on timestamps for certain operations or conditions to be executed. Timestamps are not necessarily accurate in blockchain environments, as they can be manipulated by attackers. This makes the contract susceptible to delays or failures, which can lead to financial losses or other consequences. For example, if a contract specifies that a certain action must be taken within a certain time frame based on the timestamp, an attacker could manipulate the timestamp to extend the time frame, allowing for additional actions to be taken. To prevent such attacks, it’s crucial for smart contract developers to thoroughly analyze the contract’s code and test it in various scenarios, as well as regularly monitor and update the contract’s code.

5.Insecure arithmetic

Insecure arithmetic in smart contracts refers to potential vulnerabilities that arise from incorrect or inadequate handling of arithmetic operations. This can result in unintended consequences such as overflows or underflows, which can lead to a loss of funds or other security incidents. This type of vulnerability is often caused by the incorrect use of data types or the absence of proper checks and constraints. To prevent insecure arithmetic in smart contracts, developers need to understand the basics of arithmetic operations, use appropriate data types and libraries, and properly validate inputs and outputs.

6.Gas Grief

Gas grief is a type of attack in the Ethereum blockchain network where an attacker exploits the limited computational resources (gas) of a smart contract to execute a malicious attack. Gas is a computational resource required to execute operations on the Ethereum network and is required to be paid for by the user executing the operations. In a gas grief attack, an attacker submits many transactions to the network which consumes a lot of gas and causes the smart contract to become congested. This congestion makes it difficult or impossible for other users to transact with the smart contract and can lead to denial of service. The attacker may then benefit by buying the token or asset being traded on the contract at a lower price and then selling it for a profit when the contract is no longer congested.

7.Denial of service

A Denial of Service (DoS) attack is a type of cyberattack in which the attacker aims to make a system, network, or application unavailable to its intended users by overwhelming it with a large amount of traffic, requests, or inputs. This can be done by using malware, botnets, or other techniques to send multiple requests to a system, causing it to slow down, crash, or become unavailable. In the context of smart contracts, a DoS attack can cause a blockchain network to become congested, leading to slow transaction processing, high fees, and reduced overall performance. It is important to implement security measures to prevent DoS attacks and protect smart contract systems from these types of threats.


Force-feeding is a type of attack in smart contracts where a malicious party can send unintended transactions to a contract and force it to perform unintended actions. This type of attack can occur if the contract’s code does not properly check for and handle such malicious transactions and can result in data corruption or loss of funds. To prevent force-feeding, it is important to thoroughly test and validate smart contracts before deploying them, and to implement proper security measures such as access control and input validation.

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Author's Bio

Naveen C

Co- founder at Ecosleek Tech Research and Branding at MythX. Talks about #gaming, #metaverse, #blockchain, and #softwaredevelopment

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8 Smart Contract Security Threats