Cointelegraph announced that Hats Finance, a community-focused platform, is offering contests
Cointelegraph announced that Hats Finance, a community-focused platform that enables permissionless on-chain audit contests and bug bounties, has joined the Cointelegraph Accelerator Program.
Smart contracts, which are small programs that automate and execute an on-chain agreement, are the backbone of decentralized finance (DeFi). For this reason, eliminating any vulnerability through regular audits is vital to prevent attacks and ensure the smooth operation of the relevant decentralized applications (DApp) and Web3 as a whole.
However, reports indicate that during the first quarter of 2024, only 44% of Web3 projects underwent smart contract audits. Avoiding audits can pose significant security risks, as is evident in most hacked projects that do not undergo audits. As smart contracts become more complex due to new use cases such as Real World Assets (RWAs) and standardized wallets, the need for effective audits is greater than ever.
Decentralized audits for decentralized projects
Traditional audits fall short of meeting the demands of the high-paced and diverse Web3 environment and can be frustrating for projects. It involves a limited number of auditors or a single team, which increases the risk that weaknesses will be overlooked. The process usually takes weeks or even months and the release of important updates or features may be delayed as a result.
The average audit can cost between $5,000 to $15,000, while more complex and large-scale projects can face a six-figure bill for an audit. Furthermore, payment is required even if no security vulnerabilities are discovered. Crowdsourced smart contract audits could change that.
Hats Finance is a decentralized Web3 security protocol that aims to improve Web3 security through innovative and scalable audits, a results-focused model, and community engagement. By identifying and targeting issues with traditional audits, the platform offers decentralized audit competitions that strengthen Web3 security for all participants.
Projects seeking to ensure the integrity of their code base may leverage Hats Finance to launch automated, unauthorized audit contests. They can set up contests without prior scheduling or legwork and define the scope, rules and potential rewards for validators. Security researchers are then called in to audit the provided codes with due diligence.
A quick setup process and the involvement of a group of auditors significantly reduces the time it takes to discover and patch vulnerabilities when compared to traditional vulnerabilities. As for security researchers, Hats provide an environment where they can compete transparently for significant rewards while contributing to the security of client projects. Successful submissions may place auditors on the platform's leaderboard and help build their reputation in the Web3 space.
Hats Finance stands out as the only audit platform in the market that uses a pay-for-results model. A 20% payment fee is only charged if the audit provides value and discovers a vulnerability. Such a model prevents wastage of resources and encourages audits of projects while incentivizing security researchers and ensuring a higher level of quality assurance in return.
A dashboard for security researchers. Source: Financial Hats
Continuous and independent security
The platform offers a bug bounty program as well. After documenting and providing access to the code base, exposing previously identified vulnerabilities, establishing communication channels and creating a vault, projects are ready to launch their bug bounty program. The first submissions of each bug – excluding centralization issues or those requiring leaked keys – are rewarded with tokens for the relevant projects.
Hats Finance received approximately $4 million in its seed funding round, which will be used to prepare for the next round. The platform hosts 500 active security researchers, organizes four contests per month and aims to hold eight monthly contests before the third quarter.
By actively integrating the community into the auditing process and lowering barriers to entry such as costs and access to qualified auditors, Hats Finance enables continuous, independent security for Web3 projects.
