What Is a “Bug Bounty” Program in the Context of Smart Contract Security?

A bug bounty program is an initiative where a project offers financial rewards to ethical hackers or security researchers who discover and report vulnerabilities in their smart contracts. This crowdsources security by incentivizing skilled individuals to find and disclose bugs before malicious actors can exploit them.

The size of the bounty often depends on the severity of the discovered flaw. Bug bounty programs are considered a proactive and effective layer of security, complementing formal audits by providing continuous scrutiny of the code.