DeFi Smart Contracts and Governance BDC Practice Questions (Page 5)

Questions 21–25

1. 21foundation · easy

   Which practice is a best practice for secure smart contract development?

   • ADeploying contracts directly to the mainnet without testing
   • BPerforming extensive testing and auditing before deployment
   • CStoring sensitive data in plain text on-chain
   • DUsing tx.origin for authentication
   Reveal Solution Discussion Select an answer first
2. 22application · medium

   A DeFi protocol's smart contract allows users to deposit tokens and earn yield. A security auditor finds that the contract uses a `transfer` function instead of `safeTransfer` when interacting with ERC-20 tokens. What is the most likely risk?

   • AThe contract will allow users to withdraw more than they deposited
   • BThe contract will be unable to interact with any ERC-20 token
   • CThe contract may fail silently for tokens that do not return a boolean, causing accounting errors
   • DThe contract will be vulnerable to reentrancy attacks
   Reveal Solution Discussion Select an answer first
4. 23application · medium

   A DeFi protocol is considering implementing a governance token that also provides a share of the protocol's revenue to holders. The team is concerned about regulatory classification. Which action would most likely reduce the risk of the token being classified as a security?

   • ALimit the token supply and make it available only to accredited investors.
   • BRemove the revenue-sharing feature and use the token only for governance and utility.
   • CEnsure the token is listed on major exchanges to increase liquidity.
   • DUse a decentralized autonomous organization (DAO) to manage the token, making it more decentralized.
   Reveal Solution Discussion Select an answer first
5. 24expert · hard

   A developer is building a DeFi aggregator that routes trades across multiple DEXs. The aggregator's smart contract receives a user's tokens, performs a swap on a DEX, and then sends the output tokens back to the user. Which security concern is most critical for this contract?

   • AReentrancy during the external DEX call
   • BThe aggregator may incur high gas costs
   • CThe aggregator may not be upgradeable
   • DThe aggregator may not support all ERC-20 tokens
   Reveal Solution Discussion Select an answer first
6. 25application · medium

   A developer is building a lending protocol that allows users to deposit collateral and borrow a stablecoin. The team wants to ensure that the protocol remains composable with other DeFi protocols while minimizing the risk of price manipulation during liquidations. Which design choice best addresses both goals?

   • ADisable external calls to the lending contract to prevent flash loan attacks, ensuring only whitelisted users can interact with the protocol.
   • BUse a decentralized price oracle that aggregates data from multiple sources and add a circuit breaker to pause liquidations if the price feed deviates significantly.
   • CUse a time-weighted average price (TWAP) oracle from a single DEX and allow anyone to trigger liquidations without restrictions.
   • DUse a single centralized price feed for simplicity and rely on a large collateralization ratio to prevent manipulation.
   Reveal Solution Discussion Select an answer first