DeFi Auditing: Mechanisms, Effectiveness, and User Perceptions

Abstract

Decentralized Finance (DeFi), a blockchain-based financial ecosystem, suffers from smart contract vulnerabilities that led to a loss exceeding 3.24 billion USD by April 2022 [67]. To address this, blockchain firms audit DeFi applications, a process known as DeFi auditing. Our research aims to comprehend the mechanism and efficacy of DeFi auditing. We discovered its ability to detect vulnerabilities in smart contract logic and interactivity with other DeFi entities, but also noted its limitations in communication, transparency, remedial action implementation, and in preventing certain DeFi attacks. Moreover, our interview study delved into user perceptions of DeFi auditing, unmasking gaps in awareness, usage, and trust, and offering insights to address these issues.