Permissioned and permissionless blockchains utilize smart contract development to implement agreements among parties without any third-party involvement. It is one of the consequences of blockchain immutability that prevents any party from modifying the pre-defined conditions of a deployed smart contract.

However, this aspect of blockchain makes it impossible to update contracts in case of unfairness, incorrectness, or security flaws. So, blockchain researchers and industry experts developed upgradable smart contracts to address this issue.

Upgradable Smart Contracts

Upgradable smart contracts are computer programs that enable developers to modify their codes without changing their state, address, and balance. They give programmers the capability to add new features to projects and more.

A smart contract is an essential part of crypto tokens, decentralized applications (dApps), non-fungible tokens (NFTs), and more.It carries out the order according to predefined rules. It is immutable and permanent, so developers cannot make any changes.

However, a dApp can contain multiple smart contracts that work together to offer its backend. This means that developers can improve the interaction pattern between smart contracts. Instead of changing the code of a smart contract, developers swap one for another while upgrading the contract.

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What is the Need for Upgradable Smart Contracts

The following reasons may require you to upgrade smart contracts:

Resolving Bugs Found in Production

In such cases, developers have to opt for upgradable smart contracts to avoid any devastating consequences.

Making Improvements to the Product

Product improvement gives new value to customers with more efficiency, easier usage, and better quality. It also requires you to upgrade the product’s underlying smart contract.

Also, developers can add new features to your decentralized application (DeFi) with logic upgrades.

Code Optimization

Code optimisation can improve code quality and efficiency. As a result, a programme will use fewer resources and produce faster results. The procedure will allow for more efficient use of Ethereum gas. It is also necessary to upgrade smart contracts.

Modify Functionality

There could be some functionalities you no longer require or consider useful. You can modify these services or components by upgrading smart contracts.

Ensure Safety

Bugs in smart contracts can lead to security leads. So, smart contract upgrades can ensure end-users safety by conveniently fixing vulnerabilities identified in the post-deployment phase.

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Upgrade Mechanism

The following are the mechanisms developers can use for upgrading smart contracts:

• Proxy patterns
• Data separation
• Contract Migration

Drawbacks of Upgradable Smart Contracts

Even though upgradable smart contracts provide new functionality, bug fixing, and better user experience, they have some drawbacks. Below are some limitations of upgrading smart contracts:

Nullifies the Immutability of Smart Contract Code

Smart contracts are generally immutable, so users may be confident that no one will make arbitrary changes to an application. As a result, users are free to interact with the dApp.

Upgradable smart contracts nullify this idea of the immutability of smart contract code. It may raise concerns about decentralization and security.

Unauthorized Upgrades

Upgrading smart contracts may lead to insecure access control. Malicious actors may execute unauthorized upgrades if they get centralized access to these programs.

Developers may Skip Due Diligence

Due diligence is a critical process to check the technical condition of the product and code quality. There could be a possibility that developers may skip due diligence with smart contract upgrades to launch projects faster.

Increases Complexity

When programming upgrades functionality into smart contracts, it becomes more complicated. Further, it raises the risk of critical flaws.

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Considerations for Upgrading Smart Contracts

There are the following considerations for upgrading smart contracts:

• To prevent unauthorised updates, you must add secure access control or authorisation processes.
• Another thing to consider is that smart contract upgrades demand high diligence to prohibit vulnerabilities.
• Upgrading smart contracts is a lengthy and expensive process. Typically developers have to deploy a new version of the contract that requires manual shifting of all the states from the old contract to the new one.
• Further, you need to convey the updated contract’s address to all the contracts.

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Conclusion

Smart contracts, like other software, need upgrade with changing requirements. With the right usage, upgradable smart contracts can provide a way for significant improvements.

If you are interested in changing the functionality of your dApp, Hire smart contract developers. Contact us today to discuss your needs.