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Structuring a Bug Bounty Program for Smart Contracts

A bug bounty program, often also called a safe haven, is a program offered by organizations where individuals can receive recognition and compensation for reporting software bugs or vulnerabilities. These programs incentivize security researchers to identify and report issues responsibly instead of exploiting them. By adopting a bug bounty program, organizations can more easily identify and fix vulnerabilities and, in the process, enhance their system's security, build trust among their user base, and potentially avoid costly breaches.


To set up a bug bounty program, first, decide on the form of reward currency, which could be cryptocurrencies such as Bitcoin or Ether or traditional money. Ensure the budget covers at least one maximum bug bounty payout for prompt payments in critical cases.

Involve key stakeholders, especially from legal and finance teams, from the beginning to ensure smooth processes once the program takes effect. Although platforms like Immunefi or HackerOne can be used for managing the program, it's possible to self-administer it. Self-administration would involve:

  • Setting up a security.txt file.
  • A dedicated bug bounty section on the website.
  • Promoting the program through social media.

This approach requires substantial internal resources to manage tasks such as triaging and filtering out irrelevant submissions. In either case, an evaluation team must be assembled, ideally consisting of experienced developers and project managers.

Establish a tiered reward structure based on the severity of identified issues, using existing programs as a guide. The first point of contact for bug bounty hunters should be a triager who verifies the issue's validity, checks whether the problem has been submitted before, and ensures it's adequately documented for developers. A developer, with the evaluation team, then assesses the issue's impact, and the team determines the reward payout.

Regular communication with the submitting bounty hunter, status updates, and swift reward distribution is critical.

Guidelines and ToE

A bug bounty program's guidelines are essential in providing clear expectations for the organization and the participating researchers. They should comprehensively detail:

  1. The scope of the program,
  2. The reward structure, and
  3. The specific process for reporting vulnerabilities.

Providing examples of in-scope and out-of-scope vulnerabilities can be highly beneficial in guiding researchers in their activities and avoiding invalid submissions.

The Terms of Engagement (ToE) outline the legally binding conditions that participants must agree to before participating in the bug bounty program. They dictate how researchers should behave, what they should test, what they should avoid, and the legal implications of their actions. These terms should be precise and unambiguous, ideally divided into easily navigable sections such as definitions, responsibilities, legal considerations, and rewards. The definitions section clarifies key terms, while the responsibilities part explains the obligations and expected behavior of the researcher. Legal concerns encompass information about what happens if a researcher steps outside the program's rules or if there's a dispute about a reward.

One crucial aspect of the ToE is an explicit declaration of what constitutes unacceptable behavior. This can range from prohibitions on automated testing that could degrade service performance to restrictions on any attempts to access, retrieve, or disseminate data that is not theirs.

The reward section should define the range of possible rewards, the factors determining their amount, and the method and timing of their distribution. It's crucial to note that rewards should correspond to the severity of the vulnerability, with the highest rewards reserved for critical vulnerabilities. The legal team should review and approve The ToE to ensure they meet all regulatory requirements and adequately protect the organization's interests and the security researcher.

Communication and Speed

Maintaining open, transparent, and prompt communication is paramount in a bug bounty program. Not only does it reflect the organization's commitment to the program and its security, but it also helps build trust and rapport with the researchers. This communication should extend beyond bug verification and fixes, encompassing reward decision updates.

Fast responses to bug submissions can enhance the overall experience for the researchers and result in sustainable, long-term collaboration. Conversely, delays can lead to frustration and discourage them from participating in the future. The response time also signals how seriously an organization treats security concerns. Therefore, processes should be in place to ensure quick triaging of the reports.

Moreover, an explanation should accompany the decision when a bug report is rejected. This maintains transparency and helps researchers effectively direct their future research efforts. A detailed and constructive rejection not only provides feedback to the researcher but also fosters a learning environment, motivating the bug bounty hunter to continue their efforts and contribute in the future. It's equally important to remember that bounty hunters come from diverse backgrounds, so clear communication helps avoid potential misunderstandings.

Lastly, quick reward payouts are integral to maintaining the interest and motivation of the researchers. The timely distribution of rewards underlines the organization's respect for the researcher's contribution. For many top researchers, bug hunting can be their primary source of income, so prompt payment can make a significant difference in attracting and retaining talent.

The Right Mindset

Internally, understanding a bug bounty program as a tool for continuous improvement is essential. Vulnerabilities, an inescapable part of any software, should be viewed as opportunities for growth, not evidence of failure. This mindset creates a constructive environment, shifting focus from placing blame to advocating for neverending refinement.

Externally, it is essential to cultivate mutual respect between internal teams and bounty hunters and recognize them as valuable contributors to security. They are not adversaries. Furthermore, the company's leadership must view the bug bounty program as an investment in their security infrastructure, where the enhanced security and trust garnered from a successful program far outweighs the monetary cost. This proactive approach sets a bug bounty program up for success.