How to Identify Web3 Risks and Manage

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Web3 security is one of the very hot topics in the Web3 world. With continuous research and advancement in this field, we are still looking at ever-evolving security risks. This statement is also supported by the fact that the number of incidents has been on a continuous rise over the past few years.

Let You would be surprised to know that according to “THE BLOCK”, 22 incidents were reported amounting to $269 million in losses between 1st January 2023 and 14th April 2022. The number of attacks in Q1 2023 was almost double that in Q1 2022. You see, this is an alarm stating that now is the time every web3 user must be aware of the security risks. This blog is a step in that direction. (If you are interested in more stats, that too in graphical form, do check out our Hackerboard)

Table of Contents

Web3 Security Risks

Web3 security risks refer to the threats and vulnerabilities in the Web3 ecosystem. These risks revolve around smart contract vulnerabilities, phishing attacks, malicious code, social engineering attacks etc.

When it comes to Web3 risk management, we need to be very much security oriented during the development phase; we prefer continuous monitoring more on the managing part later. Let’s first understand how the risks are identified.

Identifying Security Risks

Identifying security risks is hard yet necessary for buidling a good and trustable dApp in Web3. It is one of the hardest phases. Under this, you are required to identify where your dApp lags and how that can result in loss so that you can prevent such incidents before they even happen.

In this section, let’s discuss different techniques and methods to identify various Web3 security risks in dApps.

Web3 security tools and platforms:- Different tools and platforms leverage the power of machine learning and data analytics to identify patterns and anomalies indicative of security threats.
Bug Bounty programmes:- These programmes incentivise web3 security experts to identify vulnerabilities in concerned web3 applications. These programmes ensure wide coverage of the projects from a security point of view.
Dynamic Analysis:- These analysis techniques are used to assess the behaviour of dApps and blockchain networks during the runtime. This process helps monitor network traffic, capturing the interaction with smart contracts.
Static Code Analysis:- Unlike dynamic analysis, these analytical tools and methods are specifically designed for smart contracts. These tools specifically search for potential vulnerabilities and coding errors.
Penetration testing:- This term is not new when it comes to Web security as a whole. Like traditional security practices in Web3, we perform penetration testing on dApps and blockchain networks to identify potential vulnerabilities and exploit them. This is often done by simulating real-world attacks.
Security Audits:- Going for an audit is one of the secure methods used extensively to get full coverage of smart contracts of the dApp. The audits involve analysing the codebase for vulnerabilities, including common issues like reentrancy, access control, underflow/overflow and even much more than that. The audits ensure the complete safety of the dApps.

These are the very common and popular ways a dApp can ensure its safety and security in the ever-evolving security threats faced by our Web3 world. But what about managing these issues? How can we ensure that these issues are dealt with?, Continue reading to find out.

Web3 Security risk management

Managing Web3 risks is a whole other-level game in itself. It focuses on minimising the impact of potential vulnerabilities and threats to protect user funds, data and overall systems. This is one of the crucial roles for building a secure and safe dApp.

In this section, let’s discuss different techniques and methods used to manage Web3 security risks in dApps.

Keep yourself updated:- This is one of the most beneficial things to do. You see, with the ever-advancing technologies and different tricks to compromise the dApp, the hackers keep coming up with new and new ways to break into systems thus, to stay in the game, we should follow security advisories from blockchain platforms, smart contract auditing firms and other popular sources like QuillAcademy.
Continuous monitoring:- To detect and respond to security incidents, one thing you can’t definitely miss is continuous monitoring for web3 security. This involves real-time monitoring of the blockchain transactions and network activity and helps identify suspicious behaviour or any abnormal patterns which sound an alarm of something malicious.
Secure development practices:- When it comes to Web3 security risk management, we must maintain a security-oriented mindset while developing smart contracts. This means we must adhere to industry standards and coding guidelines and use well-known and well-tested frameworks and libraries only.
Code Audit:- As discussed above, smart contract audits are an awesome way to identify the Web3 risks and get good coverage of the project, but this very process works wonders when it comes to managing the risks as it also involves fixing them, a skill full team like QuillAudit’s helps their clients with better guidance and better audit reports.
Testing and Formal Verification:- You can not go live without testing your dApp. Without testing you can never be sure of its functionality robustness. There are different modes of testing, manual and automated, and both have their special place, when it comes to formal verification, it means to mathematically prove the correctness of the smart contracts. To learn more about them, check https://blog.quillaudits.com/2023/02/16/testing-and-formal-verification/

Conclusion

There are many Web3 vulnerabilities out there, and it is crucial to get a grip on how to identify and manage the risk, and this is what we learnt about in this blog. There are some web3 security projects that improve the overall case scenario by providing Web3 security tools. Like for example, a tool which works as a web3 vulnerability scanner for verifying the authenticity of newly launched tokens was launched by QuillAudits with the name of QuillCheck. This scanner takes input in the form of a token name and tells how likely the token is to result in a rug pull, Isn’t that great!!!!, Try out the tool at https://www.quillaudits.com/tools/quillcheck.

QuillAudit has always been a very active player when it comes to Web3 security. In order to create future Web3 wizards, we know that CTFs are the way forward along with many Web3 security challenges to train the developers to be experts, and this is what we are trying to do with an initiative named “QuillAcademy” we are on our mission to provide Web3 with security experts which don’t only know how to code but also how to protect.

Not only through CTF, we bring you post-hack analysis, educational content in the form of videos on our youtube channel and many more things that awaits enthusiastic people like you. Don’t waste any time, and head on to our website to learn more.

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