NFTs garnered a whole lot of attention beginning from the 2021 and its popularity is growing rapidly, with everyone from celebrities to sport stars, artists and musicians to even businessmen introducing their own non-fungible tokens. The NFTs run on smart contracts just the way the decentralized finance or the DeFI applications run and hence it is important that a NFT audit is performed diligently as any security attack might make the owner lose their NFT forever. Blockchain protocols In this blog article, we will discuss the various security issues for the NFTs, how to identify them and the need of a smart contract audit for a NFT project. Although Eth nodes are the primary force behind the concept of NFT smart contracts, but there are other equally capable blockchains as well.
NFT Security Issues and How to Identify Them
At the time of the purchase of the NFT, the buyer purchases its unique identification certificate and does not actually invest in the actual object. The certificate of authenticity for digital artifacts or objects is unique that leads to the Interplanetary File System. The importance of an NFT cannot be understated, as they provide the user with security and stability. The node created by this system is run through a parent company which can lead to losses if the company that is minting NFTs experiences hacks or exits from the market. In that case the user will be at the risk of losing access to his NFT collection and there are chances that the purchased NFT value might fall to zero.
Often it is seen that the lack of adequate identity verification leads to the NFT marketplaces being flooded with a high number of fake artworks and the purchaser also has problems identifying the authentic from the fake objects. In the event of a stolen NFT, the actual creators have to attest ownership of their work or the object. Often the lack of adequate interaction between the marketplaces has been pointed as the reason behind the main identity verification problem. The absence of databases in the industry that could be utilized by the marketplaces for identity verification purposes is an issue.
Even though the thrust in 2021 was on the concept of decentralization, centralized platforms such as Open and Nifty Gateway are still the most preferred platforms of users to engage in buying the NFTs. The centralized platforms store the private keys and hence any hacking attempt or serious attack against these marketplaces can lead to loss of users as it may disable them to access their NFTs.
Recent NFT hacking examples
There have been several instances of NFT hacks in the recent past such as when the hackers exploited the backend vulnerability of the OpenSea marketplace and purchased NFTs at lower (previous prices) and then resold them at higher prices. LooksRare DDoS Attack experienced a denial-of-service attack in January 2022. Lympo-sponsored sports blockchain-based NFT platform suffered a hot wallet data breach, resulting in the loss of over $18 million.
In the wake of recent hacks, it’s clear that even NFT smart contracts are not immune to vulnerabilities. The problem lies with users who try minimizing expenditures on gas and finding ways for free tokens–which can lead them into malicious activities if their code isn’t audited properly or cracks found in advance by other researchers beforehand!
NFT Smart Security Audit Important Step Against NFT Hack
The greatest NFT security issue is the inability to safeguard the underlying smart contract from cyberattackers. Smart contract vulnerabilities may allow a malicious actor to mint NFTs without the consent of the market. Social engineering techniques can be leveraged by malicious actors to make users’ NFTs transfer their funds to a bogus address. The biggest threats associated with smart contracts include Denial of Service attacks, re-entrancy attacks, and front-running.
Necessity for Smart Contract Audit for NFTs
Smart contract audit will help a NFT project to find any features in the code that trigger manipulations which could see the reputation of assets lost. Smart contract audit can help the code operate more efficiently.
During the smart contract analysis of an NFT project, auditors test for flaws affecting service uptime, gas limit, re-entry, unreliability, random number generation, overflows, and underflows. Each vulnerability identified is rated according to its severity, so a project can determine which security holes to fix first. Streamlined solutions could also be developed by blockchain architects with the use of the blockchain nodes. Node computational power, node ability can help develop bespoke solutions for solving critical challenges.
Choosing an auditor of NFT projects mainly depends on the professionalism and experience of a company along with the list of projects that it has already audited. If there are many NFT projects among it’s clients, then it should not be tough for them to be considered for an audit by this provider. The team’s scope of understanding of smart contract execution is additionally a factor that determines the outcome of the audit.
Auditing the smart contract is essential to ensure the safety and effectiveness of your NFTs. Zeeve can help you with this by conducting professional code auditing to ensure the NFTs you own are functioning to the best of their capability. We will also make sure that your contract will work as intended.