Cointelegraph has recently announced that Hats Finance, a platform focused on community involvement and allowing for permissionless on-chain audit competitions and bug bounties, has joined the Cointelegraph Accelerator program.
Smart contracts are essential in decentralized finance (DeFi) as they automate on-chain agreements. Regular audits are crucial to eliminate vulnerabilities and ensure the smooth operation of decentralized apps (DApps) and Web3 as a whole, preventing potential attacks.
Despite the importance of audits, reports indicate that only 44% of Web3 projects underwent smart contract audits in the first quarter of 2024. Neglecting audits can pose significant security risks, as demonstrated by many hacked projects lacking proper audits. With smart contracts becoming more complex due to new use cases like real-world assets (RWAs) and modular wallets, the need for effective audits is greater than ever.
Hats Finance is a decentralized Web3 security protocol that aims to enhance Web3 security by providing scalable and innovative audits, a results-driven model, and community engagement. The platform offers decentralized audit competitions to improve Web3 safety for all participants by addressing issues related to traditional audits.
By utilizing Hats Finance, projects can launch permissionless and automated audit competitions to ensure the integrity of their codebase. Setting up these competitions is quick and easy, allowing projects to define the scope, rules, and potential rewards for auditors. Security researchers are then invited to scrutinize submitted codes thoroughly.
Hats Finance differentiates itself by employing a pay-for-results model, where a 20% payout fee is only charged if the audit adds value by detecting a vulnerability. This model prevents resource wastage, encourages audits for projects, incentivizes security researchers, and ensures a higher level of quality assurance.
In addition to audit competitions, Hats Finance also offers a bug bounty program. Projects can launch their bug bounty program by providing access to the codebase, disclosing known vulnerabilities, setting up communication channels, and creating a vault. Submissions for each bug are rewarded with tokens from related projects, except for centralization issues or those requiring leaked keys.
With nearly $4 million in seed funding, Hats Finance plans to further develop its platform. Currently hosting 500 active security researchers, the platform organizes four competitions per month and aims to increase that number to eight competitions monthly by the third quarter.
By involving the community in the audit process and reducing barriers to entry such as costs and access to qualified auditors, Hats Finance strives to enable continuous and autonomous security for Web3 projects.