Emerging L1 Protocol Security Threats

Emerging L1 Protocol Security Threats

Emerging L1 Protocol Security Threats

Emerging L1 Protocol Security Threats

Emerging L1 Protocol Security Threats

Read Time: 8 minutes

Layer 1 protocols are the heart of the blockchain ecosystem. If you do not know about what Layer 1 is, please refer to this blog. Once you know about Layer 1, you will appreciate its beauty in providing the underlying foundation for decentralised applications and digital assets. The layer 1 protocols ensure the trust of transactions through cryptography, enable decentralisation by eliminating the need for middle parties, promote the interoperability between dApps and digital assets and improve the scalability and performance for real-world use cases. Layer 1 protocols are the fundamental blocks which make the Web3 ecosystem what it is today by facilitating secure, transparent and decentralised Web.

But the world of Web3 is not completely safe. There are risks involved in it, too, and to mitigate these risks, it is important to go for an audit. The Layer 1 protocol audits are crucial in ensuring the security of the protocol and assets built on top of it. Under these audits, security experts conduct deep assessments of the protocol’s codebase, smart contracts, consensus mechanisms and algorithms. They look for vulnerabilities like coding errors, logical flaws and potential attack vectors, which could lead to huge losses if left unchecked. 

Emerging L1 Protocol Security Threats

We see a daily advancement in the methodologies and techniques hackers use for personal gains. This contributes to the ever-advancing security threats that Layer 1 protocols face. These threats result in financial losses, disruptions and manipulation of transactions which also compromises the trust and reliability of protocols. Let’s go through some of the security threats that Layer 1 faces.

Smart contract vulnerabilities

Coding errors, logic flaws, or design weaknesses in the code of smart contracts on blockchain can lead to vulnerabilities such as reentrancy attacks, integer overflow/underflow, unchecked external calls, access control issues, and denial of services attacks which malicious actors can exploit to manipulate, steal or lock the funds up.

Network attacks

Network attacks aim to disrupt or compromise the operation of a blockchain network through malicious activities. Some common types of network attacks include DDoS attacks, Sybil attacks, Eclipse attacks, Routing attacks etc. These attacks compromise the security of the blockchain network.

Governance and consensus attacks

These attacks involve manipulating voting or decision-making processes to gain control over or influence the network rules or policies. Attempting to manipulate the consensus mechanism, such as PoW or PoS, to gain unauthorized access or manipulate transactions comes under consensus attacks. Protecting against these kinds of attacks requires robust governance processes.

Side-channel attacks

The side channel attacks in blockchain involve exploiting leaked information through unintended channels like power consumption or timing to gain unauthorised access to the network. Protection against these hacks needs security measures such as secure hardware components, encryption, and randomized techniques to help prevent information leaks through side channels.

Importance of L1 Protocol Audits in Identifying and Mitigating Threats

Layer 1 protocol audit helps us identify and mitigate the emerging security threats in the blockchain by conducting a deep dive into the protocol smart contrast and identifying weak areas of the protocol design and some crucial areas like codebase and architecture. In this blog section, let’s look at some auditing features.

Identifying vulnerabilities in smart contracts

As a part of auditing, It is critical to identify vulnerabilities in smart contracts. It helps to ensure the security and reliability of the smart contract. If vulnerabilities exist in the contracts, they can be exploited and may result in huge losses, which is neither good for the protocol nor the users. As we know, smart contracts are immutable, meaning that any error or vulnerability in the code cannot be easily corrected once deployed on the chain; thus, we should do a deep analysis of smart contracts before moving on the chain. 

Evaluating network security measures

As discussed in the previous section, what network attacks are, let’s discuss it as a part of auditing. Evaluating network security helps assess the overall security of a protocol’s network. This process includes the testing and reviewing of network architecture, access controls, encryption and decryption mechanisms, also network monitoring. A good network evaluation helps identify potential vulnerabilities and ensure the protocol is safe and secure.

Assessing the governance and consensus mechanisms

As a part of the auditing process, this involves evaluating the governance structure, consensus mechanism, node management, access controls and compliance with regulations. THis ensures that the protocol is secure, compliant and operates reliably.

Evaluating privacy protections

This part of the auditing process involves reviewing measures to protect data confidentiality and privacy, like encryption, access controls and compliance with privacy regulations. Through an audit, we aim to ensure that sensitive data is protected and privacy requirements are met.

Audits of Layer 1 protocol have worked wonders for them. After auditing, some key vulnerabilities were found and fixed so the protocol does not face any malicious users harming it. In 2018 the L1 protocol audit identified a critical vulnerability in the Parity wallet smart contract that could have resulted in the loss of millions of dollars in under funds. An audit helps in many ways and ensures complete security of the protocol and the users.

Best Practices for L1 Protocol Audits

In the previous sections, we talked about the security threats we are dealing with in today’s Layer 1 protocols and what important part auditing plays in rectifying those security threats, in this section, let’s talk about how we can make the most out of audits when it comes to the ever-advancing security threats. In this section, we will see the best practices to follow when auditing for a particular security threat category. Let’s start:-

Comprehensive smart contract review

Comprehensive smart contract review involves a thorough and systematic evaluation of code, standard checks, security, compliance and other vulnerability-related tests of a smart contract deployed within a Layer 1 protocol on the chain. It includes a complete analysis of the codebase, logic, data flow and interactions with the other smart contracts so that no single vulnerability or security flaw gets unnoticed.

It is considered one of the best practices because it helps secure the Layer 1 protocols, and most of the time, there are always some or other issues within the protocol which can be identified through comprehensive smart contract reviews. The Layer 1 audit help ensure the security, reliability, compliance and trustworthiness of the blockchain network.

In-depth evaluation of network security measures

Auditors should include some of the methodologies and practices like analyzing the protocol’s design, implementation for security risks and vulnerabilities and reviewing the relevant documents along with assessing the network’s security mechanisms when it comes to the in-depth evaluation of network security measures. 

Auditors should also test the network’s security mechanisms as well as evaluate compliance with relevant security standards and regulations along with defence against common security threats such as 551% attacks, DDoS attacks, Sybil attacks and also should ensure that the protocol’s upgrade and change mechanisms do not compromise the protocol’s security in any manner.

A thorough assessment of governance and consensus mechanisms

It is one of the crucial practices to follow while auditing a protocol because it requires a multifaceted approach. It involves carefully reviewing the documentation, evaluating design principles and implementation details of the protocol, and testing and assessing the decentralisation fairness by evaluating upgrade and change mechanisms. This ensures that the protocol meets the best standards for security. This practice also ensures that the consensus mechanisms are designed, implemented and operated in a manner that aligns with the goals and requirements of the protocol.

Evaluation of privacy protections

While evaluating privacy protection, some best-considered practices include the analytical study of the design and implementation of the privacy features, reviewing relevant documentation and testing of the privacy features for effectiveness and evaluating compliance with relevant privacy standards. 

Auditors should consider the protocols privacy goals and assess what kind of privacy features aligns with the protocol; sometimes privacy features come with a trade, so it gets of utmost importance to decide what kind of privacy features are needed in the first place and what trade-off are we doing also the auditors must be very careful about any the potential risks and vulnerabilities that could compromise the privacy of the users by following the best practices.

Collaborative approach with the development team

Following a collaborative approach with the protocol development team immensely benefits the protocol. It establishes a clear line of communication between different teams involved. This includes regular check-ins, status updates and progress reports. It is also essential to have a solid understanding of the project’s goals, objectives and requirements. This is something the development team can help auditors with. Also, it is important to follow a structural development process which includes agile methodologies. This will help ensure that the project is moving forward in a timely and effective manner. Also, the feedback from the teams, the developers and auditors is very important to help improve everyone in their respective fields.


Regarding Layer 1 protocols, they are one of the most liked targets of hackers in Web3. It becomes much more important to look after these protocols’ security and safety parameters. In this ever-advancing world of hacks, we need to be always on our toes to protect the protocols and users, as we know users are most important when it comes to protocols. In this blog, we discussed some of the key risks involved in Layer 1 protocols, the auditing guidelines and how to ensure you stay safe.

When it comes to security, nothing can beat a good audit. Audits do not only help you secure yourself but also serve as a token of trust for the users. The audit reports immensely help users analyze and place their trust in the right protocol so that they can feel secure and safe while using any protocol and can enjoy the Web3 experience seamlessly. Nowadays, more and more companies are prioritizing audits because of the fact that there can be no business if you cannot keep the users safe, and there can be no user unless your protocol ensures their safety; thus, it is of utmost importance now to provide users with reliable audit reports and putting relevant security checks and updates.

When looking for audits, QuillAudits have been in the game for quite some time now and have worked with some of the awesome Web3 projects and helped them secure themselves. QuillAudits aim to make Web3 safer for everyone, with 700+ projects secured. We bring in a team of experts who can tackle security-related tasks, find innovative ways to secure a protocol, and deliver an outstanding audit report. Do visit the website to learn more.


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