Smart Contract Security: New Threats and Prevention Methods in the Blockchain World

Cryptocurrencies and Blockchain technology are reshaping the concept of financial freedom, but this revolution has also brought new security challenges. Attackers are no longer limited to traditional technological vulnerabilities; instead, they cleverly turn the Blockchain smart contracts protocols themselves into tools for attack. Through meticulously designed social engineering traps, they exploit the transparency and irreversibility of Blockchain to transform users' trust into means of asset theft. From forging smart contracts to manipulating cross-chain transactions, these attacks are not only covert and hard to trace, but also possess a strong deceptive quality due to their "legitimate" appearance.

1. How do legitimate agreements become tools for fraud?

Blockchain protocols should be the cornerstone of ensuring security and trust, but criminals have cleverly exploited its characteristics, combined with user negligence, to create various covert attack methods. Here are some common techniques and their technical details:

(1) malicious smart contracts authorization

Technical Principles: On blockchain platforms like Ethereum, the ERC-20 token standard allows users to authorize third parties (usually smart contracts) to withdraw a specified amount of tokens from their wallets through the "Approve" function. This feature is widely used in DeFi protocols, such as certain DEXs or decentralized lending platforms, where users need to authorize smart contracts to complete transactions, staking, or liquidity mining. However, malicious actors exploit this mechanism to design malicious contracts.

Operation mode: An attacker creates a DApp disguised as a legitimate project, often promoted through phishing websites or social media. Users connect their wallets and are induced to click "Approve", which appears to authorize a small amount of tokens, but could actually be an unlimited amount (uint256.max value). Once the authorization is complete, the attacker's contract address gains permission to call the "TransferFrom" function at any time, extracting all corresponding tokens from the user's wallet.

(2) Signature Phishing

Technical Principles: Blockchain transactions require users to generate signatures using their private keys to prove the legitimacy of the transaction. Wallets typically pop up a signature request, and after user confirmation, the transaction is broadcast to the network. Attackers exploit this process to forge signature requests and steal assets.

Operation method: Users receive an email or social media message disguised as an official notification, such as "Your NFT airdrop is ready to claim, please verify your wallet." After clicking the link, users are directed to a malicious website that requests them to connect their wallet and sign a "verification transaction." This transaction may actually call the "Transfer" function, directly transferring cryptocurrency from the wallet to the attacker's address; or it could be a "SetApprovalForAll" operation, authorizing the attacker to control the user's NFT collection.

(3) Fake tokens and "dust attacks"

Technical Principles: The openness of the Blockchain allows anyone to send tokens to any address, even if the recipient has not actively requested it. Attackers exploit this by sending small amounts of cryptocurrency to multiple wallet addresses to track the activity of the wallets and link them to the individuals or organizations that own the wallets.

Operating method: Attackers usually distribute "dust" to user wallets in the form of airdrops. These tokens may have enticing names or metadata (such as "FREE_AIRDROP"), luring users to visit a certain website for details. Users may attempt to cash out these tokens, while the attackers can access the user's wallet through the contract address attached to the tokens. More covertly, dust attacks can analyze users' subsequent transactions through social engineering, locking onto the user's active wallet addresses to carry out more precise scams.

2. Why are these scams hard to detect?

The success of these scams is largely due to the fact that they are hidden within the legitimate mechanisms of Blockchain, making it difficult for ordinary users to discern their malicious nature. Here are several key reasons:

1. Technical Complexity: The code of smart contracts and signature requests can be obscure and difficult for non-technical users to understand. For example, an "Approve" request might be displayed as hexadecimal data like "0x095ea7b3...", making it hard for users to intuitively assess its meaning.

2. On-chain legality: All transactions are recorded on the Blockchain, appearing transparent, but victims often only realize the consequences of the authorization or signature afterwards, at which point the assets can no longer be recovered.

3. Social Engineering: Attackers exploit human weaknesses such as greed ("Get $1000 worth of tokens for free"), fear ("Account anomaly requires verification"), or trust (impersonating wallet customer service).

4. Sophisticated disguise: Phishing websites may use URLs similar to official domain names (such as variants of normal domain names) and even increase credibility through HTTPS certificates.

3. How to Protect Your Cryptocurrency Wallet?

In the face of these scams that coexist with technological and psychological warfare, protecting assets requires a multi-layered strategy. Here are detailed preventive measures:

Check and manage authorization permissions

• Tools: Use the authorization check tool of the Blockchain explorer to check the authorization records of the wallet.
• Operation: Regularly revoke unnecessary authorizations, especially unlimited authorizations to unknown addresses. Before each authorization, ensure that the DApp comes from a trusted source.
• Technical details: Check the "Allowance" value; if it is "unlimited" (such as 2^256-1), it should be revoked immediately.

Verify link and source

• Method: Manually enter the official URL to avoid clicking on links in social media or emails.
• Check: Ensure the website uses the correct domain name and SSL certificate (green lock icon). Be wary of spelling errors or extra characters.
• Example: If you receive a variant from the official website (such as additional characters), immediately suspect its authenticity.

Use cold wallets and multi-signature

• Cold Wallet: Store most assets in a hardware wallet and connect to the network only when necessary.
• Multi-signature: For large assets, use multi-signature tools that require multiple keys to confirm transactions, reducing the risk of single point of failure.
• Benefits: Even if the hot wallet is compromised, the cold storage assets remain safe.

Handle signature requests with caution

• Steps: Each time you sign, carefully read the transaction details in the wallet pop-up. Some wallets will display the "Data" field, and if it contains unknown functions (such as "TransferFrom"), refuse to sign.
• Tools: Use the "Decode Input Data" feature of the blockchain explorer to parse the signature content, or consult a technical expert.
• Suggestion: Create a separate wallet for high-risk operations and store a small amount of assets.

Responding to dust attacks

• Strategy: After receiving unknown tokens, do not interact. Mark them as "spam" or hide.
• Check: Confirm the source of the token through the Blockchain explorer, and be highly vigilant if it is a bulk send.
• Prevention: Avoid disclosing wallet addresses or use a new address for sensitive operations.

Conclusion

By implementing the above security measures, users can significantly reduce the risk of becoming victims of advanced fraud schemes, but true security does not solely rely on technology. When hardware wallets build a physical defense and multi-signature diversifies risk exposure, the user's understanding of authorization logic and prudence in on-chain behavior become the last bastion against attacks. Every data analysis before signing, and every permission review after authorization, is an oath to one's own digital sovereignty.

In the blockchain world where code is law, every click and every transaction are permanently recorded and cannot be altered. Therefore, cultivating security awareness and maintaining a balance between trust and verification becomes key to safely advancing in this emerging field.