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Private or Competitive Audits: Safeguarding DeFi Protocols in the Age of Security Threats

Private or Competitive Audits: Safeguarding DeFi Protocols in the Age of Security Threats

3 minute read

As the decentralized finance (DeFi) ecosystem continues to thrive, security remains a paramount concern. In Q4 2023, over $700 million has already been stolen from DeFi platforms, highlighting the urgent need for robust security measures. One crucial step in ensuring the safety of users and funds is conducting extensive audits of protocol codes. However, a key question arises: Should protocols opt for private or competitive audits? Let’s delve into the analysis of various factors and provide ins

As the decentralized finance (DeFi) ecosystem continues to thrive, security remains a paramount concern. In Q4 2023, over $700 million has already been stolen from DeFi platforms, highlighting the urgent need for robust security measures. One crucial step in ensuring the safety of users and funds is conducting extensive audits of protocol codes. However, a key question arises: Should protocols opt for private or competitive audits? Let’s delve into the analysis of various factors and provide insights into the best approach for auditing DeFi protocols.

Private Audits: A Comprehensive Approach

Private audits involve a select group of 2-4 security researchers conducting a thorough examination of the codebase. This meticulous process results in a detailed report encompassing vulnerabilities, architecture guidance, and comprehensive reviews and tests. Private audits provide a deep understanding of the code and offer a security partner who accompanies the development and deployment journey.

Competitive Audits: Embracing a Global Perspective

Competitive audits take a more inclusive approach, allowing security researchers worldwide to scrutinize the codebase. This broader participation often leads to the discovery of a wider range of vulnerabilities. However, the resulting report may not be as comprehensive as that of private audits.


Choosing the Right Approach

Determining the ideal audit approach depends on several factors:

Project's Stage: In the early stages, both private and competitive audits yield valuable insights. Pre-deployment, competitive audits with multiple auditors can uncover more bugs. Post-deployment, bug bounties incentivize hackers to identify vulnerabilities. For upgrades, private audits offer crucial contextual knowledge to conduct a thorough analysis.

Project's Timeline: Private audit firms often have busy schedules for months in advance. If your product is nearing launch, a competitive audit may be the best option. However, some firms offer retainer options that facilitate continuous releases and faster timelines.

Complexity of Code: The complexity of the codebase, determined by its size and advanced functionality, influences the audit approach. For highly complex codebases, a combination of private and competitive audits is recommended. Private audits provide a deep dive review and report, while competitive audits help identify all possible vulnerabilities.

Budget: The budget allocated for audits plays a significant role in the decision-making process. Competitive audits, such as those offered by CodeHawks, provide flexible pricing options catering to projects of various sizes. Private audits, on the other hand, can range from $40,000 to $60,000 per week, with some complex projects reaching over $500,000 in total.


The Importance of Vigilance

There is no one-size-fits-all solution when it comes to audits. The key principle to remember is that the more audits a codebase undergoes, the less likely a hack will occur. When deploying your codebase to the Mainnet, considering a combination of private and competitive audits, along with bug bounties, will help ensure the safety of users' assets.

Conclusion

In the ever-evolving landscape of DeFi, the security of protocols and user funds must be a top priority. Extensive audits, whether private or competitive, provide critical insights and help mitigate risks. Choosing the right audit approach depends on factors such as project stage, timeline, code complexity, and budget. Regardless of the chosen approach, conducting thorough audits is a crucial step in safeguarding the integrity and trustworthiness of DeFi protocols in a world where security threats loom large.

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