Smart Contract Audits Are Broken. Here’s the New Way to Stay Ahead of Hackers

Traditional smart contract audits are slow, costly, and ineffective for teams that ship fast and often. This article explores how Audit AI enables real-time vulnerability detection and remediation, providing a more efficient solution for blockchain enterprises.

Smart contract security is in a state of crisis. Manual audits—once the gold standard for blockchain enterprises—are now an expensive, time-consuming, and insufficient solution. With vulnerabilities emerging faster than they can be caught, businesses are exposed to catastrophic risks that can negatively impact their finances and critical operations.

The reality is that smart contracts that pass audits today could be exploited tomorrow. Manual audits provide only temporary security and over-reliance on them may lead to complacency towards evolving threats. Agile developer teams are faced with the challenge of swiftly deploying safe code within the constraints of this broken model.

Why Smart Contracts Are at Risk

Companies routinely spend between $20,000 and $50,000 for a single smart contract audit​, yet manual audits are no longer enough. Despite being costly and resource-heavy, they are static assessments that provide only a snapshot of your security at a single moment in time.

Furthermore, when there are any changes to the contract or blockchain environment—whether through updates, integrations, or new attack vectors—your smart contract is left exposed until the next audit, if there’s even time or budget for one. Enterprises have learned the hard way that these audits don’t address the dynamic nature of blockchain environments.

A recent example is Velocore, a well-audited DeFi project that was hacked for $6.8 million in USDT, USDC and LP tokens despite commissioning three independent audit firms​. The fact that even the best audits missed critical vulnerabilities is a stark reminder that manual audits are not optimised for real-time, continuous security. This single incident led to the untimely shutdown of the company as the treasury was liquidated in order to attempt a reimbursement of disgruntled users.

Hidden Costs of Manual Smart Contract Audits

Manual smart contract audits come with challenges that go beyond their hefty price tag. While they appear thorough, real operational costs start to add up after fact, such as:

• Time: Manual audits can take weeks or months to complete, during which your contracts remain vulnerable​ and critical aspects of your business may be crippled.

• Manpower and Human Error: No matter how experienced the auditor, manual reviews are prone to oversight, often making it necessary to engage multiple teams of auditors. For blockchain enterprises with complex smart contract security needs, this compounds the headache of high upfront fees.

• Operational Disruption: Pausing services during a breach not only inconveniences users but also impacts revenue streams. It’s simply bad for business.

• Eroded Reputation: Blockchain enterprises often spend years building trust around their brands in order to increase their market share. Smart contract exploits are the fastest way for investors and users to lose trust in the platform, often proving fatal for growing DeFi startups like Velocore.

• Compliance Issues: Companies that fail to secure their smart contracts may face legal repercussions, including liability for losses suffered by users. This is becoming more common, especially in regulated environments like Europe and Singapore.

Reactive vs. Proactive Smart Contract Security

Many blockchain enterprises turn to monitoring tools that often create a false sense of security. Tools claiming to offer “real-time protection” usually focus on monitoring transactions and detecting issues after they occur. As a result, they can only respond to visible threats in the mempool, which sophisticated attackers often bypass using private transactions​​.

Even in the few cases where these tools detect suspicious activities relatively early, they’re often a case of too little, too late. Standalone monitoring systems react to attacks in progress rather than proactively preventing them, meaning the damage is often already done before an alert is triggered​. The Velocore hack, where multiple monitoring solutions failed to warn before multiple smart contracts attacks effectively put the company out of business, is a sobering example of this flaw​.

In another recent incident, 8,309 ETH valued at $27 million was lost due to a smart contract exploit that targeted Penpie, a protocol built on Pendle. While the team was able to contain the damage with the help of some network monitoring tools, they failed to sniff out the warning signs of the initial attack, leading to irreversible damage to the organisation’s finances and reputation. The team has been forced to put up a white-hat bounty as a last resort, a controversial practice that has been observed to embolden threat actors.

Moreover, these tools focus primarily on external threats but fail to address the foundational cracks in the proverbial armour—vulnerabilities hidden in the smart contract code. In short, conventional monitoring solutions are reactive, not proactive, and they fall short when it comes to the real-time, on-chain defence that enterprises need.

Audit AI: Always-On Protection

Audit AI is the latest offering from FailSafe Protocol. At its core, it is designed with a keen understanding of the pain points faced by agile developer teams. Audit AI enables continuous, real-time vulnerability detection and remediation. Unlike traditional audits, Audit AI is always on, always scanning, and always adapting to new threats.

Instant Security, Without the Wait

Audit AI can be deployed in real-time, identifying vulnerabilities as they emerge. Whether you’re deploying a new contract or updating an existing one, Audit AI ensures every line of code is scanned for potential weaknesses. This constant vigilance eliminates the gaps in protection that manual audits and delayed monitoring tools fail to account for.

Instant Remediation

When Audit AI detects a vulnerability, it does more than just flag it—it suggests immediate remediation solutions. This means you don’t have to wait for an external auditor or security team to step in. Your developers get actionable insights instantly, allowing for rapid fixes without disrupting workflows​ or missing important deadlines.

Reduce Audit Costs by Over 70%

Manual audits routinely cost tens of thousands of dollars per contract. Audit AI, in contrast, delivers comprehensive coverage at a fraction of the cost. It eliminates the need for multiple, expensive external reviews, saving your business significant time and money​.

Unlimited, Continuous Auditing

Unlike manual audits, which are expensive and one-off events, Audit AI offers unlimited, continuous auditing. For enterprises running multiple smart contracts, this is an invaluable advantage. You’re not paying per audit anymore; you’re paying for ongoing security that scales as your project grows.

Security at Every Stage

Audit AI integrates directly into your development environment, working as a security co-pilot for your developers. More importantly, it’s part of a comprehensive network security system that covers every aspect of smart contract and blockchain protection. Fully compatible with other FailSafe modules like Guard for smart contract access control, Interceptor for real-time automated threat response, and Radar for counterparty risk analysis, Audit AI works seamlessly within a defence-in-depth strategy. This holistic approach means that vulnerabilities are caught and fixed in real time, while unauthorised transactions are blocked, and suspicious activity is flagged instantly.

Outperform the Competition

Manual audits and traditional monitoring tools have had their day, but they are no longer sufficient for next-gen smart contract development processes. Top performers in the blockchain industry stay ahead of the competition by shipping updates and new features in lockstep with the market’s feedback. Manual audits slow this down, but Audit AI provides real-time, continuous security checks, allowing faster, safer deployments. This allows businesses to move quickly, iterate often, and maintain their competitive edge.

Audit AI is just better than manual audits, but it also outperforms competing solutions that claim to provide automated security. Existing tools like SolidityScan focus narrowly on vulnerability detection but fail to offer the comprehensive, real-time remediation and continuous coverage that Audit AI provides​. For blockchain enterprises serious about security, Audit AI is the clear choice.

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FailSafe is a cybersecurity partner uniquely equipped to assist enterprises in complying with consumer protection and technological risk management requirements. We are the only blockchain security provider offering holistic security and real-time threat response against exploits, hacks, and suspicious activities as they’re happening.

Currently protecting over $300M in digital assets, FailSafe closely collaborates with the Singapore government and the Singapore dollar (SGD) stablecoin to stop exploits in real-time, preventing total loss of funds and de-pegging events. Our modular tools supercharge the security of blockchain enterprises with cutting-edge capabilities like smart contract defence, fraud detection and internal risk scoring, programmable multi-sig wallet security, SDK integrations, advanced threat intelligence, and recovery of at-risk crypto assets.

Learn more about our products or contact us to upgrade your blockchain security today.