DeFi Smart Contracts and Governance BDC Practice Questions (Page 1)

Questions 1–5

1. 1application · medium

   A developer is building a lending protocol that allows users to deposit collateral and borrow stablecoins. The protocol integrates with an external price oracle to determine collateral value. Which design choice best reduces the risk of oracle manipulation?

   • AUse the latest price from a single centralized exchange
   • BAllow the protocol administrator to update prices manually
   • CUse a time-weighted average price (TWAP) from a decentralized exchange
   • DRely on the borrower's reported collateral value
   Reveal Solution Discussion Select an answer first
2. 2expert · hard

   A lending protocol has a vulnerability that allows an attacker to manipulate the price oracle to under-collateralize a loan and drain the liquidity pool. The team is considering two fixes: (1) using a decentralized oracle with multiple sources, and (2) adding a circuit breaker that pauses the protocol if the price deviates by more than 5% in a short period. Which approach is more robust?

   • ACombine both a decentralized oracle and a circuit breaker, as they address different aspects of the risk.
   • BUse a time-weighted average price (TWAP) oracle from a single DEX, as it is resistant to short-term manipulation.
   • CUse a decentralized oracle with multiple sources, as it directly prevents price manipulation.
   • DAdd a circuit breaker that pauses the protocol on large price deviations, as it provides a safety net against any oracle failure.
   Reveal Solution Discussion Select an answer first
4. 3application · hard

   A developer is designing a DEX that uses an automated market maker (AMM) model. The team wants to minimize the impact of impermanent loss for liquidity providers while maintaining composability with other protocols. Which approach is most aligned with these goals?

   • AUse a constant product formula (x*y=k) and allow anyone to provide liquidity in any token pair.
   • BUse a hybrid model that combines a constant product formula with a dynamic fee that adjusts based on volatility.
   • CUse a concentrated liquidity model where LPs can choose a specific price range, reducing impermanent loss for stable pairs.
   • DUse a constant sum formula (x+y=k) for all pairs, which eliminates impermanent loss.
   Reveal Solution Discussion Select an answer first
5. 4application · medium

   A DAO is implementing a governance system where token holders can vote on protocol parameter changes. To reduce the risk of flash loan attacks, the team wants to ensure that voting power reflects long-term commitment. Which mechanism is most effective?

   • AUse a time-weighted voting power system that requires tokens to be locked for a minimum period before they become eligible to vote.
   • BDelegate voting power to a small committee of elected representatives who vote on behalf of token holders.
   • CAllow any token holder to vote in the same block as a flash loan, but require a minimum quorum of 10% of total supply.
   • DUse a snapshot of token balances at the start of the voting period and allow voting for 24 hours.
   Reveal Solution Discussion Select an answer first
6. 5foundation · easy

   What is 'vote buying' in the context of governance attacks?

   • ACreating multiple wallets to vote multiple times
   • BAcquiring tokens through a decentralized exchange to increase voting power
   • CUsing a bot to automatically vote on all proposals
   • DPaying token holders to vote in a certain way
   Reveal Solution Discussion Select an answer first