Phase 1: Traditional Audit by Lead Auditor


The Protocol team should provide the source code repository access along with all supportive documentation (papers, manuals, diagrams, etc.) that could be helpful for the audit. All the inputs are also open to the public, allowing the public auditors to access them as early as possible.


The lead auditor provides the Host with an initial estimation of the necessary duration for this phase. The duration tends to be a tight estimate as the next phase will have the same duration, while the lead auditor can win the dynamic pool if he outperforms the public auditors. This estimated duration is denoted as LPL_P. The Host decides the duration based on the protocol's complexity and the lead auditor's estimation. Note that this duration estimation is vital, as it affects the total cost of the audit and is usually determined during the negotiation between the Client and the Host.


The first phase is a traditional audit by a lead auditor, who could be an individual or an audit firm. The selection of a lead auditor is based on their expertise and experience, generally represented as an Auditor Score. However, the Host can also consider other factors, such as the auditor's availability and the Client's preference.

The lead auditor, engaged in all the phases and playing a vital role in the audit process, is heavily incentivized with a fixed guaranteed percentage of the reward pool.

In this phase, the lead auditor's responsibility is to conduct a comprehensive audit, producing an audit report and a system analysis report. The audit process is similar to a traditional audit model, with the protocol development team involved to assist the lead auditor in understanding the protocol.

Due to the dynamic structure of the reward pool, the lead auditor is heavily incentivized to conduct a thorough audit, as the more vulnerabilities left undiscovered, the lesser the reward will be. Furthermore, the lead auditor's performance score affects the final auditor score, encouraging them to uncover as many issues as possible.

The entire audit process should be transparent, with findings accessible to anyone as soon as they are identified. This allows the protocol development team to begin mitigation immediately as well.

Once the audit is complete, the lead auditor must deliver the Audit Report V1.0, which contains all the findings and recommended mitigation steps. The protocol team must address all findings (either fix or acknowledge them) and provide the Audit Report V1.1, containing all responses to the lead auditor. The lead auditor checks the mitigation comments from the protocol and publishes the Audit Report V1.2 with his responses to all comments. At this point, phase 1 of the audit is concluded. The lead auditor must also provide an initial system analysis report, System Analysis Report V1, which describes the protocol from a security perspective.

Furthermore, the lead auditor must share the line-by-line comments and walkthrough explanations of the findings with the public auditors. This facilitates the transfer of information from one phase to the next, ensuring that all relevant information is passed on to the next phase. It is worth noting that the lead auditor might have conflicts of interest in sharing the information with the public auditors. Still, the Host can enforce this requirement by contract and utilizing the collaboration score.


The Judge decides the validity and severity of the findings. The Host may assist in triaging the findings and aiding the Judge in decision-making if necessary. Notably, neither of the protocol team nor the lead auditor is the final decision maker. The judging is done in parallel with the audit process, and the findings are published as soon as they are identified.


The outputs of this phase include:

  • Audit Report V1.2 The report contains all findings and recommendations from the lead auditor.

  • System Analysis Report V1 The lead auditor is responsible for writing a brief system analysis report describing the protocol from a security perspective.

  • Repository with all comments from the lead auditor. Auditors usually leave comments to facilitate their understanding and mark the process. This is a valuable asset that can significantly assist other auditors. The lead auditor is required to leave comments in a kind of standard format to help other auditors.

  • Video recording of the protocol walkthrough/brainstorm/QA by the lead auditor Once the initial audit report V1.0 is delivered, the Host arranges a session in which the lead auditor explains the protocol and answers questions from other auditors, if any. This session is recorded and published to assist other auditors in subsequent phases.

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