KUALA LUMPUR (Dec 26): Smart contracts are becoming more popular and valuable, making them a more appealing target for attackers.
Several smart contracts have been targeted by hackers in recent years.
Cryptocurrency news portal Cointelegraph explains that smart contracts are essentially automated agreements between the contract creator and the recipient.
It said written in code, this agreement is baked into the blockchain, making it immutable, as well as irreversible.
In a report Sunday (Dec 26), the portal however said a new trend appears to be gaining traction; namely, attackers are no longer looking for susceptible contracts but are adopting a more proactive strategy.
Instead, it said they aim to trick their victims into falling into traps by sending out contracts that appear to be vulnerable but contain hidden traps.
Honeypots are a term used to describe this unique sort of contract.
Honeypot crypto trap
Cointelegraph said honeypots are smart contracts that appear to have a design issue that allows an arbitrary user to drain Ether (Ethereum's native currency) from the contract, if the user sends a particular quantity of Ether to the contract beforehand.
However, when the user tries to exploit this apparent flaw, a trapdoor opens a second, yet unknown, preventing the ether draining from succeeding.
What does a honeypot do?
The aim is that the user focuses entirely on the visible weakness and ignores any signs that the contract has a second vulnerability.
Honeypot attacks function because people are frequently easily deceived, just as in other sorts of fraud.
As a result, people cannot always quantify risk in the face of their avarice and assumptions.
In crypto cyber attacks like honeypots, the user's cash will be imprisoned, and only the honeypot creator (attacker) will be able to recover them.
Types of honeypots
Cointelegraph said there are two types of honeypots based on the design and deployment of smart contracts: research and production honeypots.
It said honeypots for research collect information on attacks and are used to analyse hostile behaviour in the wild.