How to Safeguard Your Crypto Investments: The Importance of Security Audits in DeFi

Key Takeaways

• Security is crucial in DeFi. Just like we wouldn’t fly with an airline that skips maintenance, we shouldn’t trust projects without proper security measures.
• Audits are essential for trust. Independent security audits review code, team, operations, and community to ensure a project is safe to use.
• Always verify before investing. A project with a 90+ security score is generally safe, but ultimately, your funds’ security is your responsibility—DYOR before making any decisions.

Tonstakers prioritizes security with a fully non-custodial staking model, ensuring that user funds remain protected at all times. With a 95.61/100 code security score and an active bug bounty program, it stands among the safest staking solutions on TON.

Would we fly with airlines knowing they didn’t inspect their planes regularly and hire undertrained pilots? We’d pick more reliable airlines. But when it comes to DeFi, we didn’t care enough about researching the project’s security until it was too late.

There are two ways to check if the project is safe to use: spend time to research it yourself or check the audit reports by security specialists, if a project underwent one. In this feature, we’ll explain why DeFi projects can be hacked, how security firms audit projects with Tonstakers as an example, and how to score projects by yourself. Let’s dive in!

How many billions were lost due to hacks?

The beauty of blockchains lies in full code-based governance. Developers create smart contracts that accept tokens and do something with them automatically without humans involved.

A code-based economy has pros: no cashier can make a mistake or take a bribe. Code does what it was designed to do without saying a word. But it also has cons: the code has to be perfect because a tiny mistake can open doors for hackers to steal your tokens from a smart contract.

By DeFiLlama, from 2017 hackers stole $8.21 billion worth of crypto. Hacks happen quite often: 1–5 incidents per month with at least $1,000,000 stolen because of poor private key management, vulnerabilities, and backdoors that were spotted too late.

The biggest DeFi hack ever — the Ronin Bridge incident — led to the loss of $625 million because its devs intentionally “made security trade-offs”, as they confessed later. How can users be sure that the project is secure, if sometimes devs play on the hackers’ side?

##How do you check a project’s security by yourself?

Before buying a token or using a project you can do your own security research by following steps from our DYOR article.

In short, find out about the team, see if the code is open source, check the fundamentals, and read what the community writes about them. It might take an hour or two to find everything and if you aren’t a programmer, you won’t be able to spot bugs and backdoors.

While DYOR is the main principle of blockchains, it is much faster and easier to read the audit results made by specialists.

What is a security audit for a blockchain project?

Security audits are done by dedicated security firms like Certik. They usually employ cybersecurity specialists and former hackers to check project code, point at weak spots, suggest solutions, and give a final security score.

Certik is one of the best security firms that audited TON, Binance, Bybit, and other major companies. Its typical audit reviews four criteria:

• Code — potential bugs and vulnerabilities.
• Fundamentals — core team’s competence.
• Operations — long-term sustainability and dedication to security.
• Community — users’ experience and satisfaction.

Each criterion is scored separately, and together they form the final score.

How do auditors ensure code security?

Smart contract vulnerability means that if the contract receives specially crafted data, it behaves not as expected. Imagine a contract that accepts users’ deposits as usual, but when it receives exactly 4.1491241 TON, it gives all stored funds to the person who deposited this amount.

Cybersecurity specialists ensure that the contract behaves as intended with any input data and then try to hack the contract manually by creating weird schemes and transaction sequences. Specialists also search for potential vulnerabilities and backdoors, like the possibility for a team member to withdraw users’ funds.

For Tonstakers, the code security score is 95.61 out of 100. Tonstakers devs did a lot of things to achieve it and make the service one of the safest on TON:

• The liquid staking is fully non-custodial. Everything is managed by smart contracts, so the team cannot withdraw a cent from the staking pool.
• The tsTON minting mechanism is safe from threats. No one can mint tsTON out of thin air and steal funds from Tonstakers pool.
• The Tonstakers pool is safe from bad actors. Dishonest validators can’t trick the Tonstakers pool into not returning provided TON and Tonstakers rewards.

Why are fundamentals being reviewed?

Blockchains are anonymous and permissionless: everyone can launch a dApp or a token without revealing his or her identity. Because of this, there are cases of North Korean hackers joining legit projects and then stealing users’ funds.

Auditors must ensure such incidents won’t happen. For example, Certik verifies core team members and their skills to ensure they are real people with relevant backgrounds and won’t scam their users. During the audit, Tonstakers got 5 core team members’ identities verified to achieve a 92.05 out of 100 score in fundamentals,

What is the operations score in the security audit?

This criterion focuses on how the project maintains security over time and which measures guarantee this. For example, large projects like Curve and Balancer got hacked because of bugs that appeared after their websites updates.

Tonstakers enforce modern internet security standards to ensure the website and app are safe. More on top, Tonstakers maintains a bug bounty program with rewards up to 50,000 TON ($350,000 at the time of writing). Independent white hackers and security specialists can claim rewards for submitting bugs and helping to make Tonstakers even safer.

Why does community matter for security score?

Imagine ordering a laptop from a brand you see for the first time. The hardware is good, the design is fire, and it costs less than the closest competitor. What would you check before buying? Other buyers’ reviews, of course!

Certik explores the projects’ communities on various platforms to complete the security score. If the project and its users are active on social media then everything is good.

Tonstakers scored 92.07. Join our Twitter and the Telegram channel to see how it will affect our community score!

Can you trust a project without a security audit?

You better not. It’s like trusting a car without knowing if the airbags are working or trusting an online shop without users’ reviews.

Conclusions

Before putting tokens in a project, check not only reward rates but their security too. Use this table to quickly score a project.

If the project underwent a security audit and reached a 90+ total score, you are safe. Security specialists checked even the smallest details and helped devs close even the tiniest potential vulnerabilities.

Remember, that in the blockchain ecosystem, only you are responsible for your funds’ safety. Don’t trust, DYOR, and verify everything yourself!