DeFi Smart Contracts and Governance BDC Practice Questions (Page 4)

Questions 16–20

1. 16foundation · easy

   What is a key difference between on-chain and off-chain governance?

   • AOff-chain governance is always more secure than on-chain governance
   • BOff-chain governance is only used by centralized organizations
   • COn-chain governance requires a centralized authority to execute decisions
   • DOn-chain governance executes decisions automatically via smart contracts, while off-chain governance relies on manual implementation
   Reveal Solution Discussion Select an answer first
2. 17foundation · easy

   In a decentralized exchange (DEX) using an automated market maker (AMM) model, what determines the price of an asset?

   • AA committee of token holders who vote on prices
   • BThe ratio of assets in a liquidity pool
   • CThe average price from external centralized exchanges
   • DA central order book maintained by the exchange
   Reveal Solution Discussion Select an answer first
4. 18application · medium

   A developer is designing a yield farming protocol that rewards users with a new governance token. The protocol uses a staking contract where users deposit LP tokens. Which feature is essential to prevent a common exploit in such contracts?

   • ADo not use any external libraries
   • BUse a pull-payment pattern for reward withdrawals
   • CAllow users to stake and unstake in the same transaction
   • DUse a fixed reward rate that never changes
   Reveal Solution Discussion Select an answer first
5. 19application · medium

   A DeFi protocol's governance token is deemed a security by a regulator. The protocol team wants to continue operations while reducing legal risk. Which action is most aligned with compliance best practices?

   • ADecentralize the protocol completely so no single entity is responsible
   • BIgnore the regulator and continue as before
   • CRestrict trading of the token to accredited investors and implement KYC/AML checks
   • DBurn all governance tokens and issue a new utility token
   Reveal Solution Discussion Select an answer first
6. 20expert · hard

   A governance proposal is about to pass that would change the collateral factor for a volatile asset. An attacker plans to use a flash loan to acquire a large number of governance tokens just before the voting deadline to swing the vote. The protocol currently uses a simple token-balance snapshot at the end of the voting period. Which additional safeguard would be most effective against this specific attack?

   • AImplement a time-delayed execution of the proposal after the vote passes, allowing users to exit if the change is unfavorable.
   • BIncrease the quorum requirement to 50% of the total token supply.
   • CUse a decentralized oracle to verify the token balance of each voter at the snapshot block.
   • DRequire voters to have held their tokens for at least 30 days prior to the snapshot block.
   Reveal Solution Discussion Select an answer first