Cointelegraph announced that Hats Finance, a community platform, offers competitions
Cointelegraph announced that Hats Finance, a community platform that enables unauthorized 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, form the backbone of decentralized finance (DeFi). For this reason, eliminating any vulnerabilities through regular audits is essential to prevent attacks and ensure the proper functioning of the affected decentralized applications (DApps) 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 evidenced by most hacked projects that are not subject to audits. As smart contracts become more complex due to new use cases such as real-world assets (RWA) and standardized wallets, the need for effective audits is greater than ever.
Decentralized audits for decentralized projects
Traditional audits fail to meet the demands of the dynamic and diverse Web3 environment and can be frustrating for projects. This involves a limited number of auditors or a single team, increasing the risk that weaknesses will be overlooked. The process typically 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 and $15,000, while more complex and large-scale projects can face a six-figure bill for an audit. Additionally, payment is required even if no security breach is discovered. Crowdsourced audits of smart contracts could change that.
Hats Finance is a decentralized Web3 security protocol that aims to improve Web3 security through innovative and scalable auditing processes, a results-driven 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 looking to ensure the integrity of their code base can leverage Hats Finance to launch automated, unauthorized audit contests. They can run contests without prior planning or process and define the scope, rules, and potential rewards for validators. Security researchers are then called in to diligently audit the provided codes.
A quick setup process and the involvement of a group of auditors significantly reduces the time needed to discover and remediate vulnerabilities compared to traditional vulnerabilities. As for security researchers, Hats provides an environment in which they can seamlessly compete for meaningful rewards while contributing to the security of client projects. Successful submissions can place validators in the platform’s rankings and help build their reputation in the Web3 space.
Hats Finance stands out as the only audit platform on 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 avoids wasted resources and encourages project audits while incentivizing security researchers and in return ensuring a higher level of quality assurance.
A dashboard for security researchers. Source: Financial Hats
Continuous and independent security
The platform also offers a bug bounty program. After documenting and providing access to the codebase, 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 a key leak – are rewarded with tokens for the projects concerned.
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, hosts four competitions per month, and aims to host eight monthly competitions before the third quarter.
By actively integrating the community into the audit process and reducing barriers to entry such as cost and access to qualified auditors, Hats Finance enables continuous, independent security for Web3 projects.
