In 2017 the news about a successful hacker attack on the Parity wallet emerged. The Parity wallet was a Smart Contract wallet that could be used for managing cryptocurrency funds. The attacker took over the control of the Smart Contract and transferred all of the currency deposited in it to his account. The damage has been estimated at USD 30M and the hack prompted waves of different, mostly negative, responses from the public.

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Why was this possible? Well, the developers of the Smart Contract made a mistake - they forgot about implementing access control for one of the critical methods of their product. And, since this method could be called by anyone in the world (that’s one of the features of public blockchains), at one point it’s been exploited. 

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The need for the risk mitigation

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The lesson to take away from these developments is the following: The concepts of the blockchain, decentralization and Smart Contracts have brought us exciting new possibilities for creating financial services. But along these possibilities, as is usually the case, came new risks. On one hand we have trustless (i.e., requiring no trusted party that could centralize the system) applications that lower the enter barrier for the financial services market. On the other hand we must understand that the exposure of this kind of infrastructure is huge. Everything we deploy to the blockchain is essentially public. 

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Exposure, when combined with high-value assets and transactions, results in high risks (or, from the perspective of a hacker - opportunities). There are ways to manage these risks and increase the security of our business. They include Risk Management and Treatment, deploying appropriate security controls (for monitoring, vulnerability management, controlling access), auditing the code before deployment to blockchain’s mainnet.

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But in this blog entry we wanted to introduce one specific way to reduce the Smart Contract-related risks significantly and at little to no cost. If you would ask us to choose just one solution for risk mitigation, we would choose to rely on the OpenZeppelin framework in the development work.

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OpenZeppelin framework

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OpenZeppelin framework is a project that has been created as a response to the Parity hack and many other incidents that happened in the web3 world over the years. The authors of the framework recognized the necessity to compile available security best practices and produce some verified code templates for use by web3 developers. 

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OpenZeppelin framework is a library of secure Smart Contract templates that your developers can use for building your product. It contains templates for most popular business models such as:

• Fungible tokens
• NFTs
• Payments
• Voting

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The main feature of these templates is that they are being built and maintained by a large (400 contributors at the time of writing), vibrant community with the Smart Contract security as a main objective. This means that an extensive body of experience and knowledge about risks, weaknesses, vulnerabilities, attack techniques is distilled down to these templates.

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As an example, the framework provides an easy-to-use Access Control role-based security model (RBAC). When you are creating your product and you want to properly authenticate and authorize specific wallets to access critical functions, all you need to do is to inherit this functionality in your code, define roles and assign wallets of your choice to specific roles.

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There are some rules, however, when it comes to using this framework. One of the most important ones is - you don’t modify the framework code itself. There were many considerations that went into crystalizing the final implementation of individual modules of the framework. If you decide to interfere with its internal mechanics, you risk compromising one or more of those, without even knowing it. 

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Summary

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To put it all together, using the OpenZeppelin framework in your development efforts is one of the best cost-effective measures to mitigate the risks related to the Smart Contract exposure. The framework provides easy-to-use templates for a variety of use cases. In subsequent blog entries I will try to give you specific examples of the usage. 

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Also, if you are building or maintaining a Smart Contract-related product or service, or you’re considering that, feel free to check our IT Security service portfolio: Risk Assessment and Treatment, Secure Architecture and Secure Code.

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