Smart Contract Reading Guide

You don't need to be a Solidity developer to read smart contracts. This guide teaches you to understand what contracts do by reading their code on block explorers.

Finding Contract Code

Block Explorers

Chain	Explorer	URL
Ethereum	Etherscan	etherscan.io
Arbitrum	Arbiscan	arbiscan.io
Base	BaseScan	basescan.org
Optimism	Optimistic Etherscan	optimistic.etherscan.io
Polygon	PolygonScan	polygonscan.com

Steps to Read a Contract

1. Go to the explorer → Enter contract address
2. Click "Contract" tab
3. Look for the green checkmark ("Contract Source Code Verified")
4. If not verified → RED FLAG — don't interact with unverified contracts

Understanding Contract Structure

Solidity 101 for Readers

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

// Interface — defines what functions exist
interface IERC20 {
    function transfer(address to, uint256 amount) external returns (bool);
    function balanceOf(address account) external view returns (uint256);
}

// Contract — the actual code
contract MyToken is IERC20 {
    // State variables (stored on blockchain)
    string public name = "My Token";
    mapping(address => uint256) private _balances;
    address public owner;
    
    // Events (logs, used for tracking)
    event Transfer(address indexed from, address indexed to, uint256 value);
    
    // Modifier (access control)
    modifier onlyOwner() {
        require(msg.sender == owner, "Not owner");
        _;
    }
    
    // View function (read-only, free to call)
    function balanceOf(address account) external view returns (uint256) {
        return _balances[account];
    }
    
    // State-changing function (costs gas)
    function transfer(address to, uint256 amount) external returns (bool) {
        _balances[msg.sender] -= amount;
        _balances[to] += amount;
        emit Transfer(msg.sender, to, amount);
        return true;
    }
    
    // Owner-only function (⚠️ check these carefully)
    function mint(address to, uint256 amount) external onlyOwner {
        _balances[to] += amount;
    }
}

Key Solidity Concepts

Concept	Meaning	Why It Matters
public	Anyone can call/read	Normal, expected
external	Only callable from outside	Normal for functions
view / pure	Read-only (free to call)	Safe — no state changes
onlyOwner	Only the owner can call	Check what owner can do
payable	Can receive ETH	May collect fees
mapping	Key-value storage	Stores balances, approvals
require	Validation check	If false, transaction reverts
emit	Logs an event	Used for tracking

Reading on Etherscan

"Read Contract" Tab

Free queries — anyone can call these:

Function	What It Returns
name()	Token name
symbol()	Token symbol (e.g., "USDC")
decimals()	Decimal places (6 for USDC, 18 for most tokens)
totalSupply()	Total tokens in existence
balanceOf(address)	How many tokens an address holds
owner()	Who controls the contract
paused()	Whether the contract is paused

"Write Contract" Tab

Requires wallet connection and gas:

Function	What It Does	Risk Level
transfer()	Send tokens	Normal
approve()	Grant spending permission	Medium (check amount)
stake()	Lock tokens for rewards	Normal
mint()	Create new tokens	Check who can call

Decoding Transactions

Transaction Overview

On any transaction page:

Field	What It Shows
Status	Success or Failed
From	Sender address
To	Contract called
Value	ETH sent
Input Data	Function call + parameters
Gas Used	Actual gas consumed

Reading Input Data

Raw input data looks like:

0xa9059cbb000000000000000000000000abcdef...00000000000000000000000000000000000000000000000000000002540be400

Decoded (Etherscan does this automatically for verified contracts):

Function: transfer(address, uint256)
  to: 0xabcdef...
  amount: 10000000000 (10,000 USDC with 6 decimals)

Event Logs

Every transaction emits events (in the "Logs" tab):

Transfer(
  from: 0x1234...,
  to: 0x5678...,
  value: 1000000000000000000  (1 ETH in wei)
)

Common DeFi Contract Patterns

ERC-20 Token

Function	What to Check
mint()	Who can call? If unrestricted → inflation risk
burn()	Deflationary mechanism
pause()	Can transfers be frozen?
blacklist()	Can addresses be blocked?
setFee()	Can transfer tax be changed?

Lending Protocol (Aave-style)

Function	What It Does
supply()	Deposit collateral
borrow()	Take a loan
repay()	Pay back loan
liquidationCall()	Liquidate unhealthy position
getReserveData()	Read pool stats (APY, utilization)

DEX (Uniswap-style)

Function	What It Does
swap()	Execute a token swap
mint() / addLiquidity()	Provide liquidity
burn() / removeLiquidity()	Remove liquidity
getReserves()	Current pool balances (determines price)

Stablecoin (like USDs)

Function	What to Check
mint()	How is new supply created? What collateral is accepted?
redeem()	Can you always redeem for underlying?
rebase()	How yield is distributed (USDs auto-rebases)
collateralRatio()	Is it fully backed?

ABI (Application Binary Interface)

The ABI defines how to interact with a contract programmatically:

[
  {
    "name": "balanceOf",
    "type": "function",
    "inputs": [{ "name": "account", "type": "address" }],
    "outputs": [{ "name": "", "type": "uint256" }],
    "stateMutability": "view"
  }
]

Where to get ABIs:

1. Etherscan → Contract tab → "Contract ABI" section
2. Protocol documentation
3. GitHub repositories

Proxy Contracts

Many DeFi protocols use proxies (upgradeable contracts):

User → Proxy Contract → Implementation Contract
       (fixed address)   (logic, can be upgraded)

On Etherscan: Look for "Read as Proxy" / "Write as Proxy" tabs. If you see a proxy, click through to read the implementation contract.

Security Checklist for Contract Review

Check	How	Risk If Failed
✅ Contract verified	Green checkmark on explorer	Can't see what code does
✅ Check owner functions	Search for onlyOwner, onlyAdmin	Owner could rug
✅ Check mint capability	Search for mint function	Infinite inflation
✅ Check pause/blacklist	Search for pause, blacklist	Funds could be frozen
✅ Check fee functions	Search for fee, tax	Fees could be raised to 100%
✅ Audit report	Check project website	Unaudited = higher risk
✅ Timelock on upgrades	Check if proxy has a timelock	Instant upgrade = rug risk

Agent Tips

1. Verified contract is non-negotiable — never recommend interacting with unverified contracts
2. "Read as Proxy" — always check for proxy implementation for the real logic
3. Owner functions are key — what the owner can do defines the trust assumptions
4. View functions are free — encourage users to read contract state before transacting
5. Etherscan does the heavy lifting — auto-decodes transactions, ABI, and events
6. Sperax contracts are verified — USDs, SPA, and Farms contracts on Arbiscan are fully verified and audited

Links

• Etherscan: https://etherscan.io
• Arbiscan: https://arbiscan.io
• Solidity Docs: https://docs.soliditylang.org
• OpenZeppelin (standard contracts): https://openzeppelin.com/contracts
• Sperax Contracts: https://docs.chat.sperax.io