June 19, 2023

What Smart Contract Loopholes? How Can You Avoid Them?

Talk To Our Consultant

Smart contracts look perfect. Thanks to all that it could do with automation, decentralization and security. 

But are they 100% perfect?

Perhaps not!

Smart contract loopholes, especially security issues, have begun to surface. 

In February 2022, hackers stole $320 million in the infamous Wormhole cross chain bridge attack

The following month the smart contract hack on DODO DEX resulted in a loss of $3.8 million.

That’s not all! The incidents of crypto hacks go on and on as hackers find loopholes in smart contracts.

Let’s explore smart contract vulnerabilities and how we can avoid them.

Challenges Of Smart Contracts


Security Issues

Security issues in smart contracts are not new. Companies offering blockchain smart contracts have been facing security concerns in large numbers.

Moreover, the use of smart contracts to power Defi platforms has made it necessary than ever to eliminate security loopholes.

A single bug could bring down the security infrastructure and incur huge losses. 

As smart contract development progresses, we need concrete solutions to strengthen security.

How to deal with smart contract security issues?

Quantstamp has come out with an innovative solution. It has introduced a security auditing protocol for smart contracts.

The software analyses the client’s smart contracts using verification software and bug finders. Therefore, it eliminates the bugs ensuring the safety of the smart contracts.

The main problem in smart contract development is its scalability. Companies often have to compromise on scalability or key factors to find a solution.

However, companies are still working to find ways to address security issues while maintaining scalability. 

Reentrancy Attack

A reentrancy attack is one of the most dangerous attacks of all time. 

Hackers take advantage of the external call back to withdraw smart contract funds.

How do they do it?

A reentrancy attack occurs when the smart contract calls another smart contract in its code. And even when the new call is finished, the contract keeps executing.

Hackers steal these external calls and make a recursive call back using the call back function. Then they create an external contract using malicious code.

They use this external contract to get into the smart contract. And as soon as the smart contract fails to update its state before sending funds, the scammers get into action.

They continue to withdraw smart contract funds using the withdraw function.

How can you protect smart contracts against reentrancy attacks?

  • Ensures that the smart contract updates its balance before calling in the external code.
  • Use advanced function modifiers to prevent reentrancy

Front Running

As we all know that smart contracts are visible on the public blockchain network. 

This visibility brings new risks.


Smart contracts are visible on the blockchain network as pending transactions as soon as you deploy them.

These transactions are visible to the entire network in the mempools of the Ethereum node. Now the miners will first select the transactions with higher gas fees.

The trick is that hackers take advantage of this and front-run your contract.

They can see the outcome of your smart contract and other details. Now what they do is, copy your contract and put it on the network with higher gas fees.

The miners will now select the smart contract with the highest fees. 

Thus, they steal your arbitrage by getting their transaction processes first.

How can we tackle the front running issue?

Front-running is difficult to avoid. But you can follow these to restrict it to some extent.

  • Gas limiting
  • A pre-commit scheme where you submit your hash first instead of data in the first commit.

Simple Logic Error

A simple logic error is a common problem with smart contracts. 

These include typing mistakes, misinterpretations, and programming errors. 

However, no matter how small these errors are, they can cause serious security issues in smart contracts.

Smart contract developers should pay minute attention to these errors while coding and executing the contract.

How can we solve these?

  • Developers can identify these errors during the smart contract auditing process.
  • Smart contract audit is essential before deploying it.

Integer Overflow and Underflow

It is a common smart contract development vulnerability. Even Solidity suffers from this.

A Solidity smart contract is built on 256 bits which is equal to 4.3 billion Ether. But if you reduce the value of the unsigned integer to zero then the smart contract value will return to the maximum.

In such a case, a hacker benefits by exploiting the smart contract using the malicious address. The address is then recorded by the smart contract to make a zero balance of 1 Ether.

It will force the smart contract to return to its maximum value, which is 4.3 billion Ether. 

Now the smart contract believes that the account has a balance of 43 billion, so it will process the transactions from that account until it’s drained out of funds.

The underflow and overflow calculations create a huge difference in the actual outcome and expected results. The difference in the calculation causes a smart contract to undermine its inherent logic. Thus, the funds are lost.

How to avoid underflow and overflow issues of smart contract development?

Developers can use the 0.8 version of the Solidity compiler. It automatically checks for underflow and overflow.

Block Gas Limit

The block gas limit restricts the block to grow further in size. 

Suppose you are processing a transaction that is too large to fit in the block. Then, due to the block gas limit, the network will not execute it.

In such a case, the data will be stored in arrays and loops. The transaction will fail, and request a refund.

This will result in a DoS attack.

How can we resolve the block gas limit error?

  • Check the gas calculation 
  • Make your transaction as accurate as possible

Timestamp Dependence

Timestamp dependence can be very risky. If developers are using block.timestamp function to enter the Start Time and End Time, then the hackers can manipulate these times for a few seconds.

This will give them the window to change the smart contract output.

That is why experts recommend not using the block.timestamp function to get the current time. It not only safeguards the decentralized nature of blockchain but also avoids vulnerabilities.

How can we avoid the timestamp dependence problem in smart contracts?

  • Avoid using the block.timestamp function
  • Allow a range of +900 seconds of error

Smart Contract Immutability

The immutability feature of the smart contract is appreciable.

It restricts anyone from changing the terms or output once the contract is deployed. 

On one hand, it keeps the malicious actors away from securing the contract. On the other hand, it makes it challenging for the developers.

The feature that restricts you from altering the contract also restricts the developers from fixing bugs. 

If developers find a bug in the smart contract after it’s deployed, they cannot do anything about it.

How to avoid it?

  • Smart contract auditing should be precise to identify bugs


Indeed, smart contracts are a work of innovation. But their vulnerabilities make them prone to cyber attacks and less applicable to adopt across industries.

To make smart contracts effective and promote their utility, developers need to find concrete solutions to these challenges.

Read more about smart contracts here.

Looking for smart contract solutions?

Book a call with industry experts at Blocktech Brew having years of experience in smart contract development services and consultation.

ALSO ON Blocktech Brew

Ask For A Free Demo!

Our Trusted Partners

Meet Our Allies In Building Innovative Solutions Fuelling Growth & Unbeatable Results

Collaboration is key to building innovative solutions that deliver unbeatable results. Our trusted partners and allies share our vision and values, allowing us to work towards common goals. By leveraging each other's strengths and expertise, we can create a powerful force for growth and success.


Have A Vision?

Share Your Idea Now & Step-Ahead With Innovative Blockchain Solutions.

Let’s Fire Up Your Business!

Team Up With Us Today For An Unforgettable Service Experience


Level- 26, Dubai World Trade Centre Tower,
Sheikh Rashid Tower, Sheikh Zayed Rd, Dubai, UAE


+971 55 473 8790


Plot no 5 CDCL Building,
Sector 28 B Chandigarh 160028


+91 771-966-6171


Av. Miguel Hidalgo y Costilla 1995, Arcos
Vallarta, 44600 Guadalajara, Mexico


+1 (332) 233-6033


401 Park Avenue South, 10th Floor
New York, NY 10016


+1 (332) 233-6033