"Audited by [Big Name Firm]" is supposed to mean safety. But audited protocols get hacked constantly. Audits check code at a point in time. Upgrades, composability, and economic exploits bypass technical audits.
!["Audited by [Big Name Firm]" is supposed to mean safety. But audited protocols get hacked constantly. Audits check code at a point in time. Upgrades, composability, and economic exploits bypass technical audits.](https://images.unsplash.com/photo-1644361566696-3d442b5b4822?w=2000)
Hypothesis HY10011
"Audited by [Big Name Firm]" is supposed to mean safety. But audited protocols get hacked constantly. Audits check code at a point in time. Upgrades, composability, and economic exploits bypass technical audits.
Trading hypothesis
What traders get wrong
False assumption:
"This protocol was audited. My funds are safe."
Truth:
Audits don't prevent exploits because code changes after audit, economic attacks aren't code bugs, and composability creates new attack surfaces.
Problem for trader:
Audited ≠ safe. Ronin ($600M), Wormhole ($320M), Nomad ($190M) were all audited.
Key takeaways
What you should consider as a trader
- Audited ≠ safe - Ronin, Wormhole, Nomad were all audited.
- Point-in-time snapshots - Audit covers code at audit date. Upgrades invalidate.
- Economic attacks bypass audits - Flash loan attacks, oracle manipulation.
- Composability creates risk - Protocol A + Protocol B = new attack surface.
- Audit quality varies - Some audits are rubber stamps.
Data you need
Assess real protocol security
Data points:
- Audit history and scope
- Post-audit code changes
- Similar protocol exploits
- Economic attack surface
Comparison of data sources
Where to get crucial data feeds
| Source | Availability | Notes |
| Audit Reports | ⚠️ Partial | Point-in-time, technical only. |
| DefiSafety | ⚠️ Partial | Good process scoring. |
| **Madjik** | ✅ Yes | 🚀 Get API Access Now |
Available metrics for this hypothesis:
| Metric | Description | Change dimensions | Time dimensions | How to use | API spec |
| `ME10007` | Security & custody | • Absolute Value (value) • Relative Change (relchg) • Score 0-100 (score) | • Current (now) • Past 30 Days (past30d) • All History (pastAll) | Example | API |
Clean data for AI, A2A, MCP, etc.
Science behind hypothesis
Research supports this hypothesis
Over $3B was lost to hacks in audited protocols in 2022 alone.
Bottom line
Audits are necessary but not sufficient. Holistic security monitoring catches risks that point-in-time code reviews miss. Madjik tracks audit history, post-audit changes, and similar protocol exploits to give you a complete security picture beyond the 'audited by X' badge.
Practical use
How to use this data in trading:
Screen DeFi protocols and bridges for security risks before depositing funds.
Detailed examples with Python code, AI agent integration (MCP/A2A), and risk analysis:
| `ME10007` | Security & Custody Trading Guide | Example → |
API Documentation: docs.madjik.io
For informational purposes only. Not financial, investment, tax, legal or other advice.