DeFi Testing Checklist: Your Roadmap to App Security

DeFi apps introduce unique challenges that are not present in traditional software. Smart contracts, the building blocks of DeFi, can be vulnerable to attacks if not carefully tested. Additionally, the decentralized nature of DeFi makes it a target for hackers.

A robust testing strategy is essential to ensure the security, reliability, and performance of DeFi apps. When investigated through rigorous testing, DeFi startups can identify and fix vulnerabilities, protect user funds, and maintain a positive reputation. By the end of this article, you’ll have learned everything there is to know about testing DeFi apps. We’ll share DeFi testing best practices and hands-on examples of bugs we’ve found in DeFi apps.

Preparation Phase

Proper preparation sets the stage for successful testing down the road. We need to lay the groundwork before the start of comprehensive DeFi application testing. This phase involves setting clear objectives, creating a test environment, and selecting the necessary tools & resources. You’ll also need to ramp up a team proficient in blockchain testing.

Define Testing Objectives:

Identify key functionalities and components to be tested, including smart contracts, token mechanics, and user interfaces
Determine the scope of testing, covering aspects like security, performance, interoperability, and user experience
Establish clear success criteria and benchmarks for each test
Prioritize testing activities based on potential impact and risk
Ensure alignment of testing objectives with business goals and user needs

Set Up Testing Environment:

Create a dedicated testing environment that mirrors the production environment, ensuring accurate results
Deploy smart contracts and other components in the testing environment, verifying their correct deployment and configuration
Ensure the availability of test accounts and tokens for simulation of real-world scenarios
Configure network settings to simulate different conditions, such as varying levels of congestion and transaction fees
Implement monitoring tools to track environment stability and performance during testing

Prepare Testing Tools and Frameworks:

Select appropriate testing tools and frameworks for DeFi apps like Truffle or Hardhat, and also consider Remix IDE for smart contract testing
Set up automated testing pipelines to streamline repetitive testing tasks and ensure consistency
Ensure tools are configured to capture detailed logs and reports for analysis
Integrate version control systems to manage code changes and track modifications
Utilize bug tracking and project management tools to organize and prioritize issues identified during testing

Team Coordination and Communication:

Establish clear communication channels and protocols for the testing team, ensuring efficient collaboration and issue resolution
Define roles and responsibilities within the team, assigning specific tasks and areas of focus to team members
Schedule regular meetings and updates to track progress and address any challenges encountered during the preparation phase
Foster a collaborative environment by encouraging open communication and knowledge sharing
Implement a feedback loop to continuously improve testing processes and practices

Smart Contract Testing

Without thorough testing, DeFi apps are vulnerable to security breaches, financial losses, and operational failures. Smart contracts, the self-executing code that powers DeFi, are particularly susceptible to vulnerabilities. A single bug or flaw can lead to catastrophic consequences, such as lost funds or exploitation by malicious actors. In 2023 alone, hackers stole $2 billion in crypto. This is why smart contract testing is a crucial step in the DeFi testing process.

Unit Testing:

Write unit tests for individual functions within the smart contracts to verify their correctness
Test various scenarios, including edge cases and invalid inputs, to ensure robustness
Utilize tools like Truffle or Hardhat for automated unit testing
Ensure high code coverage to test as much of the smart contract code as possible
Validate the outcomes of each function, ensuring they match the expected results

Integration Testing:

Test the interaction between different smart contracts within the app to ensure seamless integration
Simulate complex transactions that involve multiple contracts and validate the outcomes
Ensure that data passed between contracts is correctly processed and maintained
Verify the integrity of cross-contract function calls and event emissions
Test interactions with external systems or oracles, ensuring accurate and reliable data exchange

Functional Testing:

Test the core functionalities of the smart contracts to ensure they perform as intended
Validate that user interactions with the smart contracts yield the correct results
Verify the accuracy of calculations, such as interest rates or token distributions
Test the contract’s response to state changes, ensuring correct behavior throughout its lifecycle
Conduct scenario-based testing to simulate real-world use cases and assess functionality

Security Testing:

Conduct assessments to identify and address common smart contract vulnerabilities, such as reentrancy attacks and integer overflows
Use automated tools like MythX, Slither, or Oyente to perform static analysis and detect potential issues
Perform manual code reviews to uncover subtle security flaws that aren’t detected by automated tools
Test for proper implementation of access controls and permission checks
Ensure secure handling of sensitive data and cryptographic operations

Usability Testing:

Verify that the smart contract interfaces are user-friendly and intuitive for developers and end-users
Test the readability and clarity of error messages to aid in debugging and user support
Ensure that the contract documentation is comprehensive and easy to understand
Validate the ease of integration with frontend apps or other tools
Conduct user feedback sessions to identify potential improvements in contract design and functionality

Compliance and Audit:

Ensure that the smart contracts comply with relevant standards and best practices, such as ERC-20 or ERC-721
Prepare for external audits by documenting the testing process and results
Address any issues identified by third-party auditors, implementing recommended fixes and improvements
Maintain a transparent change log of all modifications made to the smart contracts

Front-End Testing

Imagine a DeFi app where users swap Ethereum for stablecoins. If the user interface (UI) displays an incorrect token balance after a swap, or fails to update transaction statuses, users may mistakenly believe their funds are lost or stolen. Front-end testing ensures that the UI accurately reflects the user’s actions, providing a trustworthy user experience.

User Interface Testing:

Verify that all UI elements render correctly across different devices and screen sizes
Test the responsiveness of the app, ensuring it adapts well to various resolutions and orientations
Check for visual consistency, ensuring that fonts, colors, and layouts adhere to design specifications
Validate that interactive elements, such as buttons and links, function as expected
Ensure accessibility compliance, checking for compatibility with screen readers and keyboard navigation

DeFi Testing Checklist: Your Roadmap to App Security

UI issue in Trustee Wallet: The ‘Top gainers’ block displays cryptocurrencies whose price has fallen

Functional Testing:

Test core functionalities of the app, such as user authentication, transactions, and navigation
Verify that forms, input fields, and buttons work correctly and handle user input as expected
Ensure that error messages and feedback are displayed appropriately for invalid inputs or failed transactions
Test the integration of front-end components with smart contracts, ensuring data is accurately displayed and updated
Validate the accuracy of displayed information, such as balances, transaction histories, and contract statuses

Functional issue in Ultimate: Crypto DeFi Wallet: Device authentication is unexpectedly disabled after a single failed fingerprint scan

Cross-Browser Testing:

Test the app on various browsers, including Chrome, Firefox, Safari, Edge, and others
Ensure consistent behavior and appearance across different browser versions
Identify and fix browser-specific issues, such as rendering problems or JavaScript errors
Verify compatibility with browser extensions or plugins commonly used by DeFi users
Conduct automated cross-browser testing to streamline the process and catch issues early

Usability Testing:

Conduct user testing sessions to gather feedback on the app’s ease of use and overall experience
Identify and address usability issues, such as confusing navigation or unclear instructions
Test the intuitiveness of workflows, ensuring users can easily complete common tasks
Validate that help & support features, such as tooltips or FAQs, are easily accessible and useful
Iterate on the UI design based on user feedback to improve usability and satisfaction

Usability issue in Valora – Crypto Wallet: The user can’t navigate to step 2 in the account creation flow

Regression Testing:

Conduct regression tests to ensure that new updates or changes won’t introduce new bugs or issues
Maintain a comprehensive suite of automated tests to quickly identify regressions
Verify that previously fixed bugs remain resolved and non-recurrent
Ensure that core functionalities and critical paths are thoroughly tested after each update
Use version control to manage and track changes, facilitating efficient regression testing

Compatibility with Wallets and Extensions:

Test integrations with popular cryptocurrency wallets, such as MetaMask, Trust Wallet, and Ledger
Ensure smooth interactions between the app and wallet extensions, such as connecting accounts and signing transactions
Verify that wallet-specific features, such as network switching or account management, function correctly
Test compatibility with hardware wallets, ensuring secure and seamless transactions
Validate that wallet-related UI elements, such as balance displays and transaction histories, are accurate and up-to-date

Back-End Testing

The back-end infrastructure coordinates the communication between the front-end and the smart contracts, processes user data, and manages interactions with the blockchain. A well-tested back-end is essential to prevent transaction failures, data corruption, and security breaches, ultimately protecting user funds and ensuring a reliable DeFi experience.

API Testing:

Validate the functionality of API endpoints, ensuring they return the correct responses for various inputs
Test the handling of edge cases and invalid inputs, ensuring appropriate error messages and status codes are returned
Verify that API rate limiting and throttling mechanisms are in place and functioning correctly
Ensure secure handling of sensitive data in API requests and responses, using encryption and proper authentication
Conduct automated API testing using tools like Postman or Swagger to streamline the process

Database Testing:

Ensure data consistency and integrity across all database tables and relationships
Test CRUD (Create, Read, Update, Delete) operations for all relevant data models
Verify that database queries are optimized for performance, avoiding slow or inefficient queries
Test the handling of large datasets, ensuring the back-end can manage high volumes of data efficiently
Conduct regular database backups and verify the restoration process to ensure data availability and reliability

Integration Testing:

Test the integration between the back-end and front-end, ensuring seamless data flow and communication
Verify the interaction between the back-end and external services, such as oracles or third-party APIs
Ensure that data is correctly synchronized between the back-end and blockchain, maintaining consistency and accuracy
Test the back-end’s ability to handle real-time updates and notifications, ensuring timely and accurate information delivery
Validate the correct implementation of cross-chain interactions, ensuring reliable and secure operations

Error Handling and Logging:

Ensure that the back-end has robust error handling mechanisms in place, providing meaningful error messages and logs
Test the logging functionality, ensuring that all critical events and errors are accurately recorded
Verify that logs are securely stored and accessible for troubleshooting and analysis
Implement monitoring tools to track the health and performance of back-end services in real-time
Ensure that alerts and notifications are configured for critical issues, enabling prompt response and resolution

Data Validation and Sanitization:

Verify that all input data is properly validated and sanitized to prevent injection attacks and other vulnerabilities
Ensure that data entered by users or received from external sources is checked for correctness and completeness
Implement data validation rules at both the app and database levels to enforce data integrity
Test the handling of invalid or malformed data, ensuring appropriate error responses and logging
Regularly review and update data validation rules to adapt to evolving requirements and threats

Performance Testing

DeFi apps deal with financial transactions that require quick and accurate processing. High transaction throughput and low latency are critical to ensuring that users can make token swaps, lend/borrow assets, or stake funds efficiently. Performance testing validates whether the app can process a high number of transactions per second (TPS) and how quickly it responds to user actions.

In the DeFi space, any downtime or unavailability of services can result in significant financial loss for users. For example, if a DeFi app goes down during an important token sale or liquidity event, users might miss out on opportunities, which could lead to a loss of trust in the platform.

Load Testing:

Simulate a high number of concurrent users accessing the app to evaluate its ability to handle peak loads
Measure the response times and throughput of key transactions & operations under heavy load
Identify performance bottlenecks, such as slow database queries or inefficient code, and optimize them
Test the app’s behavior under sustained load, ensuring it remains stable and responsive
Use tools like Apache JMeter or LoadRunner to automate load testing and generate detailed performance reports

Stress Testing:

Push the app beyond its normal operational capacity to determine its breaking point
Assess how the app recovers from failure states, ensuring it can gracefully handle overload conditions
Identify the system’s maximum capacity and establish safe operational limits
Test the impact of hardware limitations, such as CPU, memory, and disk I/O, on app performance
Monitor system metrics and logs to identify potential weaknesses and areas for improvement

Scalability Testing:

Test the app’s ability to scale horizontally by adding more nodes or instances to handle increased load
Assess the efficiency of load balancing mechanisms, ensuring traffic is evenly distributed across servers
Evaluate the performance of microservices and their communication under varying loads
Test the scalability of the database, ensuring it can handle growing data volumes and transaction rates
Use cloud-based testing environments to simulate real-world scaling scenarios

Response Time Testing:

Measure the time taken for critical transactions and operations to complete, ensuring they meet performance requirements
Test the app’s responsiveness during high traffic periods and under different network conditions
Identify and optimize slow-performing functions or components, reducing latency and improving user experience
Test the impact of real-time updates and notifications on response times
Use automated tools to continuously monitor response times and identify performance degradation

Throughput Testing:

Measure the number of transactions or operations the app can process within a given time frame
Test the app’s ability to handle large volumes of data and high transaction rates
Identify throughput bottlenecks, such as network latency or database contention, and optimize them
Test the impact of background tasks and scheduled jobs on overall system throughput
Monitor system metrics to ensure that throughput remains consistent under different load conditions

Resource Utilization Testing:

Monitor the app’s usage of system resources, such as CPU, memory, disk I/O, and network bandwidth
Test the impact of various workloads on resource utilization, ensuring efficient use of available resources
Identify and optimize resource-intensive operations, reducing the app’s footprint and improving performance
Test the app’s behavior under resource-constrained conditions, ensuring it can function effectively with limited resources
Use performance monitoring tools to track and analyze resource utilization in real-time

Latency Testing:

Measure the time taken for data to travel between different components of the app, including front-end, back-end, and blockchain
Test the impact of network latency on transaction processing and user interactions
Identify and optimize latency-inducing operations, such as remote API calls or database queries
Test the app’s performance under varying network conditions, such as high latency or packet loss
Use tools like Wireshark or Pingdom to monitor and analyze network latency

Endurance Testing:

Run the app for extended periods under normal and peak load conditions to identify performance degradation over time
Monitor system stability and responsiveness during long-term operation, ensuring it remains consistent
Test the impact of memory leaks, resource exhaustion, and other long-term issues on performance
Validate the effectiveness of garbage collection and other maintenance processes in managing resources
Use automated scripts to simulate continuous user interactions and transactions over extended periods

Benchmark Testing:

Compare the app’s performance against industry benchmarks and similar apps
Establish baseline performance metrics and use them to track improvements or regressions over time
Identify best practices and optimization techniques used by high-performing apps
Test different configurations and architectures to determine the most efficient setup for your app
Use benchmarking tools to automate the comparison and analysis of performance metrics

Security Testing

Unlike traditional finance, DeFi lacks a central authority to quickly patch up problems. This decentralized nature makes thorough, proactive security testing absolutely crucial. Any security weakness can lead to disastrous consequences: massive losses, breaches, or full-blown exploits. This can shatter user trust and leave the platform’s reputation in tatters.

Authentication and Authorization:

Test the implementation of user authentication mechanisms, ensuring they are secure and robust
Verify that multi-factor authentication (MFA) is correctly implemented and enforced
Ensure that authorization mechanisms properly restrict access to sensitive functions and data
Test for vulnerabilities such as broken authentication, session fixation, and privilege escalation
Validate the secure handling of user credentials, using encryption and hashing as appropriate

API Security:

Test all API endpoints for vulnerabilities such as SQL injection, cross-site scripting (XSS), and cross-site request forgery (CSRF)
Ensure that APIs use secure communication protocols like HTTPS to protect data in transit
Verify that proper authentication and authorization mechanisms are in place for API access
Test for rate limiting and throttling to prevent denial-of-service (DoS) attacks

Data Security:

Ensure that sensitive data is encrypted both in transit and at rest, using strong encryption algorithms
Test the secure handling of data throughout its lifecycle, from creation to deletion
Verify that data access controls are correctly implemented and enforced
Test for vulnerabilities such as data leakage, insecure data storage, and improper data masking
Conduct regular security audits and assessments of data handling practices

Network Security:

Test the network infrastructure for vulnerabilities such as open ports, weak firewall rules, and insecure configurations
Ensure that network segmentation is used to isolate critical components and limit the spread of attacks
Verify the use of secure communication protocols and configurations to protect data in transit
Test for vulnerabilities such as man-in-the-middle (MitM) attacks, DNS spoofing, and ARP poisoning
Monitor network traffic for signs of suspicious activity or potential threats

Access Controls:

Test the implementation of role-based access control (RBAC) and other access control mechanisms
Verify that users only have access to the resources and functions they need for their roles
Ensure that access controls are properly enforced across all components of the app
Test for vulnerabilities such as privilege escalation, insecure direct object references (IDOR), and broken access controls
Conduct regular reviews and audits of access control policies and practices

Incident Response:

Test the effectiveness of the incident response plan, ensuring it is well-documented and up-to-date
Conduct regular incident response drills and simulations to prepare for potential security incidents
Verify that monitoring and logging mechanisms are in place to detect and respond to security events
Ensure that alerts and notifications are configured for critical security issues, enabling prompt response and resolution
Test the ability to quickly isolate and mitigate the impact of security incidents

Penetration Testing:

Conduct regular penetration testing to identify and exploit potential vulnerabilities in the app
Test the effectiveness of security controls and mechanisms in preventing and mitigating attacks
Use automated tools and manual techniques to thoroughly assess the the app’s security
Report and prioritize identified vulnerabilities, working to remediate them promptly
Conduct follow-up testing to verify that security issues have been resolved and controls are effective

Compliance and Regulatory Testing

The delicate balance between privacy and compliance is a major hurdle for DeFi platforms. Strict KYC/AML regulations demand personal information, potentially compromising the very privacy DeFi promises. Conversely, ignoring these regulations can risk legal repercussions. The solution may lie in a hybrid approach, leveraging privacy-preserving technologies like zero-knowledge proofs to verify identity without compromising sensitive details. This way, DeFi can adhere to legal requirements while honoring its core principle of user privacy.

Data Privacy Compliance:

Verify adherence to data protection regulations such as GDPR, CCPA, and HIPAA
Ensure that user data is collected, processed, and stored in compliance with privacy laws
Test the implementation of user consent mechanisms for data collection and processing
Validate the right of users to access, correct, and delete their personal data.
Ensure data anonymization and pseudonymization techniques are used where applicable

Financial Regulations:

Ensure compliance with financial regulations such as AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements
Test the implementation of customer identity verification processes
Verify transaction monitoring systems to detect and report suspicious activities
Ensure proper record-keeping and reporting mechanisms for financial transactions
Validate adherence to regulatory requirements for smart contracts and automated financial transactions

Security Standards Compliance:

Ensure the app complies with security standards such as ISO/IEC 27001, SOC 2, and PCI-DSS
Test the implementation of security controls and best practices as outlined by relevant standards
Verify the secure handling of payment card information and other sensitive data
Ensure that regular security audits and assessments are conducted and documented
Validate the use of secure development and deployment practices

Regulatory Reporting:

Ensure the implementation of mechanisms for generating and submitting regulatory reports
Verify the accuracy and completeness of data in regulatory reports
Test the automation of reporting processes to ensure timely and consistent compliance
Ensure the secure storage and transmission of regulatory reports
Validate the processes for handling regulatory inquiries and audits

User Rights and Data Access:

Verify that users can exercise their rights under data protection laws, such as the right to access, rectify, and delete their data
Test the implementation of user data access and management features in the app
Ensure proper authentication and authorization mechanisms for data access requests
Validate the processes for responding to user requests in a timely and compliant manner
Ensure that audit logs are maintained for data access and management activities

Smart Contract Compliance:

Ensure that smart contracts adhere to legal and regulatory requirements
Verify the implementation of compliance checks within smart contracts, such as KYC/AML verifications
Test the auditability of smart contracts, ensuring they provide necessary transparency for regulatory oversight
Ensure proper documentation of smart contract code and logic for regulatory review
Validate the secure and compliant deployment of smart contracts on the blockchain

Third-Party Integration Compliance:

Verify that third-party services and APIs integrated with the app comply with relevant regulations
Ensure that third-party data handling practices align with your compliance requirements
Test the secure and compliant integration of external services, such as payment gateways and identity verification providers
Validate the contractual agreements and SLAs with third-party providers for compliance
Ensure regular reviews and audits of third-party compliance practices

Data Breach Response:

Verify the implementation of data breach response plans and procedures
Test the effectiveness of incident response mechanisms in detecting and handling data breaches
Ensure that breach notification processes comply with regulatory requirements
Validate the secure and timely communication of breach information to affected users and regulatory authorities
Conduct regular drills and simulations to test the readiness of breach response teams

Your Partner in DeFi Security

As a tenured blockchain testing company, we’ve honed our skills in securing and optimizing DeFi apps. Our team has a proven track record of testing promising web3 and DeFi solutions, such as Wallace Wallet, Ottr Finance, Obvious – Smart Wallet, and many others.

With our DeFi testing services, you can cover every aspect of your app:

Identify and mitigate vulnerabilities in your smart contracts
Protect your app from threats like reentrancy and access control attacks
Optimize your app’s speed, scalability, and reliability
Validate the correct behavior of all app features
Ensure a straightforward and frictionless user interface

By partnering with us, you can deliver a secure, reliable, and user-friendly DeFi app that stands out in a competitive market. Contact us today to discuss your project needs and see how you can capitalize on our expertise.