The Ethereum blockchain is one of the promising systems rapidly developing and can compete with Bitcoin. This cryptocurrency is represented practically on all crypto exchanges and various NFT marketplaces.
Such widespread use of Ethereum causes corresponding risks. The higher the popularity and the number of cryptocurrency owners, the more attention it gains from scammers. That is why, in parallel with the increase in the audience of Ethereum users, the number of attempts to hack the system and steal assets also increases.
To understand the mechanisms of hacking, it is necessary to know the basics of smart contract security, attack vector types, safely track, await contract, etc. In addition, understanding the main vulnerabilities, potential risks, and security flaws are also necessary. Scroll down to find out more on this topic.
What is the Smart Contract?
Before finding an answer to the question “How to hack Ethereum smart contract?”, it is important to understand this type of contract. So, this is an agreement between two parties to a transaction: who receive and send Ether The main advantage of the current contract is its self-execution compared to other contracts.
It means there is no need to involve some third party to successfully credit or debit funds. In addition to the speed of transactions, this feature eliminates counterparty risks. In this way, you do not need to worry that one of the contract’s sides can change the balance in one direction or another. Instead, you have access to information 24/7 and can control it.
Nowadays, smart contracts are present almost everywhere. A bright example would be a regular (for example, monthly) transfer of funds from your bank account to some organization, a utility account, etc. Using a smart contract; you do not need to set up a transaction every month, enter the same data, regulate the transfer, and so on.
From a technical point of view, they are an electronic protocol (computer program) used to facilitate verification or enforce the terms of a contract.
Smart contracts consist of a piece of software code that operates based on blockchain technology. This code interacts with the blockchain registry during operation to provide certain functions under particular conditions.
Many languages are used in blockchain technology. One of the most popular is Solidity, which is used in Ethereum contracts.
Why Do You Need Smart Contracts?
Due to the way they work, smart contracts can allow unreliable code execution. As a result, it is possible to create autonomous organizations without rigid central control.
Since there is no third party (medium account), no funds are spent to ensure its functioning. In addition, the human factor is also excluded since all processes are automated and occur according to pre-determined rules. For example, a smart contract can occur only if the number of funds, time of transactions, and other parameters match.
How to Hack Smart Contracts?
Before moving on to hacking smart contracts, you need to perform several actions.
- Install Metamask, Create and set up a wallet.
- Save the seed phrase.
- Now, get the test Ether from the faucet.
- Set up a connection between Metamask and Ropsten (this is Ethereum’s test network).
- Get the remix and compiler (Solidity code) on your device.
- Install Truffle and Solidity Linter.
Remember that before moving to practice, you should learn the theoretical part. It is important to understand the terms of state variables, current balance, Ethereum virtual machine, gas limit, fallback function transfers, exact values, and other terms.
During the contract attack, the original simple contract becomes artificially manipulated. The selfdestruct function deletes the bytecode from the original address, assigns other values, and sends all Ether stored to the specified contract address. In the case when the specified address is also a contract, all functions (including the fallback function) cannot get called.
As a result, hackers build a contract with a selfdestruct function and send Ether (sometimes the entire balance) to it. After that, he calls the target and forces ether to be sent from the vulnerable contract to a target.
Key Vulnerabilities of Ethereum Contract Security
Due to technical features, smart contracts have several vulnerabilities targeted by most hacker attacks. This is done to gain access to the code, change the terms of the transaction, steal funds, and so on.
There are the following main types of vulnerability:
- replay attacks;
- integer overflow and underflow;
- reentrancy of the Ethereum platform.
Each of the vulnerabilities is described in the sections below.
Contract’s Balance: Overflow and Underflow
Both listed functions allow to occur, respectively, overflow or underflow of integers. In practice, this leads to undesirable consequences for the contract owner. The fact is that the integer is the basic unit of computer data. In the case of overflow and underflow, the integer value can be greater than or equal to the original number. In this case, it is also less than the original number, which is impossible.
Reentrancy attack
A replay attack is a blockchain failure that allows hackers to gain access to the balance of a contract and steal funds. Typically, this situation occurs when a smart contract calls a suspicious external address. In doing so, this area will re-call the original contract before the first transaction completes. Today, hackers use malicious code to steal funds from the first account before completing the transaction.
One of the most famous hacks of the decentralized autonomous organization is associated exactly with this type of attack. This happened at the stage of the formation of smart contracts when the system had not yet been improved.
Replay attack
A replay attack is a blockchain failure that allows hackers to gain access to the balance of a contract and steal funds. Typically, this situation occurs when a smart contract calls a suspicious external address. In doing so, this address re-calls the original contract before the first transaction completes. Today, hackers use malicious code to steal funds from the first account before completing the transaction.
To protect against such an attack, you should always ensure that no parties are pending the withdrawal of funds while the system is transferring cryptocurrency. Also, custom designs and withdrawal templates are a reliable way to protect your funds.
FAQ
This situation is possible because token approval often requires full access to your assets. As a result, you can theoretically lose your funds if a malicious actor has such access. MetaMask allows you to create custom permissions for your tokens to avoid such a situation.
The whole Ethereum community operates with Solidity. This is a special language for writing smart contracts and conducting transactions with the proper level of security. In the real world, this language is an area of interest for any white hat hacker (finding vulnerabilities and the same attack vector, ensuring safe data transfer between contract owner and recipient, etc.). Also, they create methods and preventative techniques, design privacy practices, etc.
If you want to withdraw funds, you should activate the transfer function on your side. Also, you can build a function for withdrawing any type of deposited Ether based on the address you give as input data.
