What is a smart contract?
Before we talk about how to make a smart contract, we should know what a smart contract is. What is a smart contract? A "smart contract" is a program that runs on blockchains such as Ethereum, Binance Smart Chain, and Bitcoin blockchain. It is a set of code (its functions) and data (its state) stored at a single address on the desired blockchain type.
Smart contracts are cryptocurrency account types that are credited and can carry out transactions throughout the network. A user does not manage them; instead, they are deployed to the network and run as intended. User accounts can then engage with a smart contract by submitting transactions that execute a smart contract-defined function. Smart contracts, like conventional contracts, can set rules and automatically enforce them through programming. Smart contracts are inherently irreversible and cannot be deleted by default.
How to make a smart contract properly
The following will guide you through how to make a smart contract.
- Utilize a development environment
The need for a development environment is to help expedite routine processes like the collection of contracts, the use of contracts, debugging agreements, contract upgrades, the conduct of unit tests, etc.
For instance, some development environments could offer the following commands;
- Compiler: a compiler translates a Solidity contract into its bytecode and ABI forms.
- Console: creates a dynamic JS console that you can use to call and communicate with your web3 contracts.
- Run the unit testing program for your contracts.
- Your contracts are deployed to a network using migrate.
To be productive quickly, use a development environment like Truffle, Hardhat, Brownie, Embark, Builder, or dApp tools.
- Start developing locally
Carrying out smart contract transactions on the mainnet is expensive and sometimes takes a while to confirm. You can ease this by utilizing a Testnet to run your contracts locally for free and immediate transactions.
To shorten the iteration process, run a local blockchain for development using tools such as SuMo or Ganache.
- Use static analytic tools
Static analysis, or "linting," is the process of running a program that analyzes code for programming errors. Choosing the right analytic tool while learning how to make a smart contract is useful for catching style inconsistencies and vulnerable code that the compiler may have missed.
- Security Assessment
Smart contract vulnerabilities are identified using security analysis tools. These programs run several vulnerability scanners, and a report of any flaws discovered is printed out. With this, you can fix them during the implementation process. Such tools include; Mythril, Slither, Manticore, MythX, Echidna, and Solgraph. So check.
- Familiarize yourself with security flaws
Another vital thing you need to learn about how to make a smart contract is the security vulnerability. Software bug-free development is typically challenging. Techniques for defensive programming are limited in scope. Fortunately, you can introduce new code to solve issues. Patches are regular and simple in conventional software development.
Smart contracts, however, cannot be changed. Sometimes it's not feasible to update active contracts. Developing a smart contract is more or less like developing virtual hardware than software.
Even worse, defects in smart contracts may result in substantial financial losses.
The mentality required in learning how to make a smart contract is different from that of web programming. The adage "move quickly and break stuff" does not apply here. A significant initial investment is required to build software that is free of bugs. You must, as a developer, learn about the security flaws in Solidity, recognize Solidity design patterns like "Checks-Effects-Interactions and Push vs. Pull Payments," and use unit tests and static analysis in your development.
- Compose unit testing
A comprehensive test suite can quickly identify errors and unusual behavior. You can find edge cases by running several scenarios through your process for testing.
- Measure Test Coverage
It is not sufficient to write tests; your test suite must effectively detect regressions. Test Coverage evaluates how well your tests work.
More of a program's code is executed during testing for a program with high test coverage. It thus means that compared to code with limited coverage, it is less likely to have undetected errors. Code that isn't tested might go awry at any time.
- Automate Continuous Integration
Run your test suite as often as you can once you've created one. You can set up Git hooks or build a CI pipeline that runs your tests following each Git push.
For the highest confidence level, hosted CIs run your unit tests frequently. You can keep an eye on your deployed contracts' transactions, states, and events.
- Check the Security of Your Contracts
Using security audits, you can find unknowns in your system that are missed by defensive programming techniques (linting, unit tests, design patterns).
You do your best to violate your contracts during this exploratory phase by providing unexpected inputs, calling functions in unusual roles, etc.
Nothing can substitute manual security assessments, especially given that the DeFi ecosystem is prone to hacking.
- Invite outside auditors
Auditors will assist in identifying any risks at the design and architectural levels and inform your team of typical smart contract weaknesses.
These auditors utilize commercial and free static analysis software, including, Manticore, Ethersplay, Slither, Echidna, etc.
- Utilize open-source, audited contracts
Use open-source, battle-tested code that has already passed security audits to secure your code from the start. The surface area you need to audit subsequently is decreased by using audited code. These contracts are adjustable to meet your needs.
- Start on an open testnet
Consider launching your protocol on a testnet before doing so on the blockchain mainnet. Set up a bug bounty program during the testnet phase. Undiscovered weaknesses can be found with the assistance of your users and the greater Ethereum security community (in return for a monetary reward).
- Keep formal verification in mind.
Formal verification is the process of demonstrating or refuting an algorithm's correctness with a standard specification by employing formal mathematical techniques. The verification is accomplished by offering formal proof using a mathematical model of the system, such as finite state machines and labeled transitions. Examples of such models include VerX, cadCAD, KLab, etc.
- Secure private keys
Ensure you keep Ethereum accounts' private keys in a safe place.
- Make it open source.
One important thing to keep in mind while learning how to make a smart contract is that anyone can create and innovate on smart contracts since they allow for permissionless innovation.
The goal of developing a DeFi standard is to draw in outside developers. And to do this, you must demonstrate that you won't eventually change the rules. Open sourcing your code encourages trust.
- Consider developer experience.
Your protocol's developer experience (DevEx) is crucial. Use developer-friendly APIs to make it simple for other developers to expand on your protocol. To get started, consider these two ideas:
- Offer contract SDKs and illustrative code
- Produce quality documentation.
- Create CLI Programs and Runbooks
Runbooks are typically a script with one or more contract calls in smart contracts that execute a transaction.
Runbooks give developers unfamiliar with the workload or the procedures the guidance they need to properly finish an activity, such as a recovery action, in the event something goes wrong. Writing runbooks help you get ready to deal with potential failure modes. Perform internal tests to find possible failure points so they can be fixed or reduced.
- Establish event tracking.
Operational excellence requires efficient and effective contract event management. Your smart contracts have an event monitoring system that notifies you of system changes in real-time. Price slippage alerts are extremely valuable for preventing hacks when developing a DeFi system.
You can use web3.js to set your monitoring backend or a specialized service like Dagger, Blocknative Notify, Tenderly, or Alchemy Notify.
- DApp Backend Construction
Smart contract data must be able to be read and transformed by dApps. For usage on the web and mobile apps, index information in a more user-friendly style.
Regarding dApp Frontend Development
Users can communicate with smart contracts through a frontend application. Augur and Compound are examples. Although dApp frontends are often hosted on centralized servers, they can alternatively be placed on the decentralized IPFS network to increase decentralization and lower responsibility.
Create-eth-app, scaffold-eth, OpenZeppelin, and Starter Kit are just a few of the available dApp boilerplates. They contain all of the components you require to begin using smart contracts from a React project.
Work toward usability.
- The usefulness of crypto is a concern. For new users, gas prices and seed words can be scary.
- Meta Transactions and the Gas Stations Network provide a solution to the gas fee issue.
Learn the systemic risks.
It would help if you determined the level of risk your protocol or currency has while making your smart contract.
- Smart contract risks
Smart contract flaws are possible. Always be prepared for the potential that a bug will be discovered in the protocols you use.
One method for estimating smart contract risk is the DeFi Score. This measure depends on several factors, including whether the linked smart contracts have undergone an audit, how long the protocol has been in use, how much money has been managed by it thus far, etc.
- Counterparty Danger
Different protocols have varying levels of control and decentralization. Be cautious of protocols that have a weak community and a short history.
Below are ways you can reduce risk.
- Use only audited smart contracts when interacting.
- Deal solely with liquid currencies with sizable community and product.
- Buy insurance for smart contracts.
Finally, get involved with developer communities.
Getting involved in online forums avails you of up-to-date information on developments. These forums include ETH Research, Ethereum Magicians, r/ethdev, OpenZeppelin Forum, and the EIPs Github repo.
Making a smart contract requires great research, funds, and more work, while also availing oneself of the technical and analytic tools to ensure the codes execute the smart contracts properly and immutably.