Incident Response and Risk Mitigation BDC Practice Questions (Page 1)

Questions 1–5

1. 1expert · hard

   A DeFi protocol has been monitoring for flash loan attacks. They notice a pattern of transactions that borrow large amounts, interact with a specific liquidity pool, and repay within the same block. What is the most appropriate response?

   • AIgnore the pattern because flash loans are always legitimate.
   • BImmediately pause the entire protocol.
   • CInvestigate the transactions to determine if they are malicious or legitimate arbitrage.
   • DBlock all flash loan transactions.
   Reveal Solution Discussion Select an answer first
2. 2application · medium

   A DeFi protocol suffers a security incident where user funds are at risk. The team has paused the protocol and is working on a fix. According to best practices for post-incident communication, what should the team do to maintain trust and comply with potential regulatory expectations?

   • AImmediately announce a full refund plan before assessing the full impact.
   • BOnly communicate with large investors and institutional partners to avoid public scrutiny.
   • CRemain silent until the fix is fully deployed to avoid panic and speculation.
   • DPublish a transparent incident report detailing the timeline, impact, and remediation steps, and provide regular updates to users and stakeholders.
   Reveal Solution Discussion Select an answer first
4. 3foundation · easy

   In a decentralized environment, what is the primary goal of incident containment?

   • ATo immediately delete all smart contracts involved in the incident
   • BTo identify the root cause of the incident
   • CTo limit the spread and impact of the incident while preserving evidence
   • DTo notify all users of the platform as quickly as possible
   Reveal Solution Discussion Select an answer first
5. 4foundation · easy

   What is the purpose of a post-incident recovery plan in a DeFi protocol?

   • ATo compensate all users for their losses immediately
   • BTo delete all transaction history related to the incident
   • CTo restore normal operations and implement improvements to prevent future incidents
   • DTo immediately relaunch the protocol without any changes
   Reveal Solution Discussion Select an answer first
6. 5application · medium

   After a smart contract exploit, a blockchain forensics team is tasked with tracing the stolen funds. The attacker used a series of intermediary wallets and a decentralized exchange to swap the stolen tokens for another asset. Which approach is most effective for tracing the funds?

   • AAnalyze the smart contract's source code to find the vulnerability and then simulate the attack locally.
   • BFollow the transaction trail from the exploit contract through each intermediary address and exchange transaction using a block explorer or analytics tool.
   • CRequest the centralized exchange's cooperation to freeze the attacker's account based on the initial exploit address.
   • DMonitor social media for the attacker's identity and then subpoena their wallet provider.
   Reveal Solution Discussion Select an answer first