Comprehensive Security Solutions for Blockchain and Emerging Tech

By: Dr. Kang Li,  Chief Security Officer, CertiK

The article discusses the importance of comprehensive security solutions for emerging industries, particularly focusing on blockchain, AI, and fintech. It highlights the evolving risks associated with smart contracts, decentralized finance (DeFi), and non-fungible tokens (NFTs), emphasizing the need for robust security measures to protect these technologies from vulnerabilities, scams, and malicious activities. The article also details various security solutions, such as auditing, KYC services, and real-time monitoring platforms, that are essential for maintaining trust, integrity, and safety in the Web3 ecosystem.

Blockchain, AI, Fintech amongst others are rapidly evolving fields, propelled by recent technological advances such as zero-knowledge rollups and cross-chain technologies. These innovations have unlocked a plethora of new applications, particularly in the decentralized finance (DeFi) space, which continues to introduce novel financial products. Additionally, non-fungible tokens (NFTs) are expanding beyond digital art into various other domains.

At the heart of these applications lie smart contracts. These contracts facilitate automated, trustless transactions and agreements directly on the blockchain, eliminating the need for intermediaries. They embody the principle of “code is law” by ensuring that the terms of the contract are enforced and executed automatically according to the code. This removes the necessity for intermediaries or traditional legal enforcement mechanisms, thereby fostering a decentralized ecosystem.

Given their immutable nature once deployed, smart contracts necessitate robust security. Any vulnerabilities within these contracts can be exploited, leading to potentially irreversible and costly consequences. Flaws or exploits can result in significant financial losses or unauthorized access, thereby undermining trust in the decentralized system. Ensuring rigorous security measures is vital to protect assets, maintain the integrity of decentralized applications, and uphold the reliability of the Web3 ecosystem.

Over $1.19 billion was lost across 408 on-chain security incidents in the first half of 2024 alone. These incidents stem from various causes, including scams, phishing attacks, and hacking exploitations.

The inherent risks associated with smart contracts, such as bugs and potential exploits by malicious actors, underscore the need for comprehensive security solutions. Additionally, the presence of rogue developers who may insert backdoors into the code further compromises the system’s security and integrity. Therefore, the blockchain field necessitates rigorous code audits, robust development practices, project team reviews, reputation checks, and enhanced regulatory oversight to mitigate these risks.

CertiK, a leading Web3 security firm, for example, offers a suite of services designed to address these concerns. These include security auditing for smart contracts, KYC services to verify the integrity of project owners and development teams, the Skynet rating system to provide analytical platforms that present risk factors of blockchain projects to individual users, and SkyInsights and Incident response systems for standard anti-money laundering (AML) solutions and support incident analysis.

Security auditing is not a catch-all solution for all security issues, but it remains the most commonly used approach to reduce security risks in the blockchain field. Various types of security auditing exist, including manual reviews and the application of static and dynamic tools, with AI tools being increasingly utilized in security auditing.

Leveraging experts in security-oriented code review, auditing can significantly reduce the likelihood of undetected bugs and vulnerabilities. Experts with security experience can provide diligent reviews and customized detection and suggestions about high-level system design and protocol logic. Auditing teams, experienced with a wide variety of blockchain projects, can offer advice to teams on where more defensive programming could reduce the risk of mistakes and loopholes.

For example, CertiK’s security engineers and researchers have developed automated static analysis toolkits that enhance the detection of flaws and critical risks, including those not easily spotted by human efforts. The approaches include Syntax Analysis, Semantics Analysis, Blockchain Vulnerability Base Analysis (70,000+ findings database), Rule Base Analysis (1,000+ rules), and Formal Verification, which mathematically proves the correctness of core components. Customizing threat models and attack scenarios for each project allows for precise analytical examinations and investigations.

Security engineers and researchers have also crafted interactive dynamic analysis toolkits, which significantly enhance the likelihood of identifying vulnerabilities and critical risks, even those that might elude human inspection and static analysis methods. This methodology includes conventional unit and integration testing, advanced property-based fuzz testing, and interactive examination. Each project benefits from a tailored threat model and attack scenario, ensuring precise and effective analytical scrutiny.

Project-level KYC services involve verifying the identities of team members and stakeholders to ensure transparency and accountability. Thorough identity checks and background verifications help prevent fraudulent projects by making it difficult for bad actors to operate anonymously. This process increases trust and reduces the risk of scams within the Web3 ecosystem.

Individual users often find it challenging to review the risks associated with a wide variety of blockchain projects. To counter scams and assist users in selecting projects based on various risk factors, specialized real-time security and analytics platforms, such as CertiK Skynet were designed. This platform monitors and protects blockchain projects by providing continuous insights, threat detection, and comprehensive security assessments. It combines on-chain and off-chain data to identify vulnerabilities, detect anomalies, and ensure the overall security and integrity of decentralized applications and smart contracts. This solution enhances user confidence and safety, allowing individuals to interact with blockchain projects more securely and with greater peace of mind.

AML and on-chain monitoring solutions help reduce scam and fraudulent activities in Web3 by monitoring and analyzing transactions to detect and prevent illicit activities such as money laundering and fraud. These solutions ensure compliance with regulatory standards, increase transparency, and create a safer environment for users by identifying and blocking suspicious behavior.

The SkyInsights solution offers capabilities for illicit activity screening, which identifies and assesses risks associated with illicit activities, helping users prevent potential legal and reputational damages. The SkyInsights solution also provides sanctions risk checking, which screens for vulnerabilities and compliance with sanctions regimes, ensuring that users remain compliant with regulatory requirements while safeguarding their operations from potential threats.

The CertiK Alert service provides real-time updates and alerts about security incidents, vulnerabilities, and other critical issues related to blockchain projects and smart contracts. This service helps users stay informed about potential risks and threats, allowing them to take proactive measures to protect their assets and enhance their security posture in the Web3 ecosystem.

It is evident that comprehensive security solutions are essential. The blockchain ecosystem is highly susceptible to various risks, including code vulnerabilities, scams, and malicious activities. Security auditing is crucial for identifying and fixing vulnerabilities in smart contracts and blockchain protocols, ensuring robust code integrity. Project KYC enhances transparency and accountability, deterring fraudulent actors by verifying the identities of team members. Comprehensive security risk ratings provide users with informed assessments of potential risks, allowing for safer investment and participation decisions. On-chain monitoring and incident response capabilities ensure real-time detection and mitigation of threats, protecting users’ assets and maintaining the trust and stability of the ecosystem.