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Smart Contract Scanning & Analysis

Before interacting with any DeFi contract, it’s critical to understand what you’re signing and how the code behaves. Many hacks exploit trust assumptions, not user mistakes. This section explains practical methods to vet smart contracts confidently.

Why Smart Contract Scanning Matters​

  • Transparency ≠ Safety: Even verified source code can hide vulnerabilities.
  • Immutable Risk: Deployed contracts are nearly impossible to patch.
  • Permissionless Risk: Anyone, including attackers, can interact with DeFi contracts.

Practical Contract Review Checklist​

1. Source Code Verification​

  • Check Etherscan: Confirm the “Contract Source Code Verified” badge.
  • Official Confirmation: Verify contract addresses against Compound’s website or GitHub.
  • Proxy Check: If the contract uses a proxy pattern, review both the proxy and its implementation address.

2. Static Analysis​

Run lightweight security scans before interacting:

slither .
  • Look for high-risk patterns:
    • Unchecked external calls
    • Reentrancy vulnerabilities
    • Unprotected admin functions

For cloud-based scanning, use MythX through Remix IDE or API tools.

3. Code Audit Review​

  • Audit Existence: Confirm whether a reputable firm audited the contract.
  • Changelog Scrutiny: If any post-audit changes exist, treat them as unaudited risk areas.

4. Deploy Simulation (Mainnet Fork)​

Use Hardhat to simulate live contract interactions safely:

npx hardhat node --fork https://mainnet.infura.io/v3/YOUR_INFURA_KEY
  • Deploy the contract on a fork.
  • Run transactions like borrow(), repay(), and withdraw().
  • Verify all state changes match expectations without surprises.

5. Critical Functions to Inspect​

FunctionWhy It's CriticalWhat to Check
delegatecall()Arbitrary code executionProperly scoped and protected
upgradeTo()Proxy manipulationRestricted to multisig or timelock
mint() / burn()Token supply controlHardcoded rules or governance gated
selfdestruct()Contract destructionDisabled in production

Tools for Smart Contract Security​

  • Slither — CLI static analysis tool
  • MythX — Automated cloud vulnerability scanner
  • Tenderly — Transaction simulation and debugging platform
  • Forta — Realtime smart contract event monitoring
  • Foundry — Local chain forking and fuzz-testing suite

Common Red Flags​

  • Upgradeable proxies with missing access control
  • Use of tx.origin instead of msg.sender
  • Sparse documentation and minimal testing coverage

These are signals of rushed deployments or hidden risks.

Example: Verifying a New Compound v3 Market​

  1. Confirm contract source is verified on Etherscan.
  2. Check if the contract matches addresses listed on official Compound repositories.
  3. Run slither locally and review findings.
  4. Fork mainnet and simulate basic user flows.
  5. Subscribe to Forta alerts for proxy upgrades or suspicious events.

Conclusion​

Smart contract scanning isn’t reserved for experts.
Spending just 30–60 minutes running basic verifications dramatically improves your security posture and keeps your DeFi activity safe from 90% of opportunistic exploits.

Next Steps​

Move forward to Module 4.3: Transaction Simulation & Pre-Transaction Inspection to learn how to predict exactly what your transactions will do before signing them.