How to Stop Smart Contract Exploits Before They Happen: FailSafe Risk Monitoring & Response

Take control of your security—detect and stop fraud and security breaches before they cause damage. FailSafe’s Smart Contract Risk Monitoring and Response solution is used by elite teams to continuously monitor smart contracts for risk and stop malicious activity in real-time.

How it Works

1. Monitor Smart Contracts: The FailSafe Risk Platform tracks every transaction in real-time, offering complete visibility into internal transactions, external calls, and events emitted.
2. Configure Rules: Start quickly with predefined security rules, or easily create tailored rules to address the unique risks specific to your operations.
3. Receive Notifications: Receive real-time alerts sent directly to your preferred messaging channels, including Slack, Telegram, Lark, and email.
4. Trigger Automated Responses: When a rule is violated or a risk is detected, trigger an immediate response, such as pausing the contract, moving funds to a secure location, and more.

Identifying Risk

Operational Risks: Detect unauthorized or unexpected invocations of privileged functions, providing early alerts for potential system failures or malicious activity before they escalate.

• Ownership Transfers: Monitor changes in ownership or administrative roles, as unauthorized modifications could signal a security breach.
• Permission or Role Changes: Track access control updates to ensure only authorized users can perform sensitive actions, helping prevent unauthorized contract upgrades.
• Unauthorized Token Minting and Burning: Detect any unexpected token minting or burning events that deviate from the expected issuance schedule.

Suspicious / Fraud Risk: Identify suspicious transactions and fraudulent behavior in real-time, enabling immediate response and minimizing potential financial and reputational damage.

• Reentrancy Attack Monitoring: Monitor for repetitive function calls within a single transaction, a common pattern seen in reentrancy attacks that can drain contract funds.
• Suspicious Gas Fees: Detect unusually high gas fees, which may indicate front-running or sandwich attacks where attackers prioritize their transactions for financial gain.
• External Contract Calls: Track interactions with external, untrusted contracts to identify potential phishing exploits or unauthorized integrations that can compromise protocol security.

Economic and Market Risk: Stay ahead of market risks by identifying abnormal patterns, such as significant price changes or unexpected liquidity movements, ensuring proactive risk management.

• Large Transfers & Fund Movements: Monitor for large, unexpected transfers from liquidity pools, which may indicate an exploit or unauthorized withdrawal.
• Flash Loan Detection: Identify sudden spikes in transaction volume or large, single-block fund movements, commonly associated with flash loan attacks targeting liquidity manipulation.
• Price Manipulation: Track unusual price fluctuations reported by oracles, which can indicate an exploit attempting to manipulate asset prices or trigger liquidation events.

Key Features

• Out-of-the-Box Alerts & Custom Rules
  • Ready-to-Use Alerts: Access a library of powerful rules to detect patterns exhibited by attackers, ready to deploy instantly. These risks are categorized as operational, economic, suspicious behaviour, such as:
    • Operational: Access role change, proxy uninitialized upgrade.
    • Economic: Flashloan, drop in balances, depegging events.
    • Suspicious: Known mixer funding, reentrancy or abusive function loops, abnormally high gas fees, OFAC and AML detectors.
  • Customizable Rules: Easily define custom rules tailored to your unique operational, compliance, and security requirements, ensuring precise and actionable risk insights.
• Comprehensive Monitoring
  • Real-Time Tracking: Gain full visibility into every transaction, including internal and external calls across contracts over any time period.
  • Multi-Contract Monitoring: Track multiple functions across various smart contracts simultaneously.
• No-Code Setup
  • Quick Start: Use pre-built templates for easy and fast monitoring setup without any coding required. Other monitoring tools require you to upgrade contracts to emit events on activity you care about.
• Reports
  • Actionable Insights: Automatically generate comprehensive, easy-to-understand reports summarizing risks, violations, and key events across monitored contracts.
• Integrated Alerts & Notifications
  • Get Notified Anywhere: Receive alerts for risky transactions or operational issues directly via Slack, Telegram, Discord, or email.
• Automated Protective Actions
  • Real-Time Response: If any policy or rule is violated, automatically trigger a predefined action on-chain, ensuring continuous compliance and rapid response to potential threats.

Customer Use Cases

DeFi Protocols 

• Enhanced Fraud Detection: Safeguard against protocol losses by quickly identifying suspicious wallets, reentrancy attacks, and anomalous behavior with real-time monitoring and automated response.
• Continuous Compliance: Maintain governance standards by tracking unauthorized changes to contract roles, ownership, and permissions.
• Proactive Risk Management: Identify flash loan exploits, liquidity shocks, and suspicious counterparties before they impact protocol stability.

Stablecoin and RWA (Real World Asset) Issuers

• Protect Token Integrity: Detect unauthorized minting or burning of stablecoins, ensuring alignment with issuance policies and maintaining trust.
• Governance Safeguards: Track changes in administrative roles or contract upgrades, preventing unauthorized control transfers and ensuring regulatory compliance.

Treasury and Fund Managers

• Liquidity Monitoring: Keep a close watch on liquidity pools for large, unexpected fund movements, preventing potential exploits or liquidity drains.
• Market Risk Alerts: Receive early warnings on significant price changes or abnormal trading patterns to safeguard against sudden market volatility.
• Automated Position Protection: Use real-time risk assessments to trigger automated defensive actions, such as reallocating assets or halting risky transactions.