Incident Response and Risk Mitigation BDC Practice Questions (Page 9)

Questions 41–45

1. 41application · medium

   A DeFi lending protocol detects a series of transactions that appear to manipulate the price oracle used for collateral valuation. The protocol's risk team suspects a flash-loan-based oracle attack. The team needs to immediately limit further losses while preserving evidence for later analysis. Which action should the team take first?

   • ATransfer all protocol reserves to a multisig wallet controlled by the core team.
   • BImmediately upgrade the price oracle contract to a new implementation using the proxy pattern.
   • CPause the protocol's borrowing and liquidation functions via the admin timelock, then begin tracing the attacker's addresses on-chain.
   • DContact the exchange that lists the protocol's governance token and request a trading halt.
   Reveal Solution Discussion Select an answer first
2. 42foundation · easy

   Which regulatory requirement is most directly relevant to incident response in DeFi protocols that handle personal data of EU citizens?

   • AGeneral Data Protection Regulation (GDPR)
   • BSarbanes-Oxley Act (SOX)
   • CPayment Card Industry Data Security Standard (PCI DSS)
   • DHealth Insurance Portability and Accountability Act (HIPAA)
   Reveal Solution Discussion Select an answer first
4. 43application · medium

   A DeFi lending protocol detects a sudden spike in the price of a low-liquidity collateral token, followed by a wave of loans being opened against that token. The protocol's risk team suspects oracle manipulation. Which immediate action best limits further damage while preserving forensic data?

   • APause the lending market for that collateral token and record the current on-chain state of all affected positions.
   • BImmediately liquidate all positions backed by the manipulated token to restore the protocol's collateral ratio.
   • CUpdate the oracle to a new price source and continue normal operations.
   • DContact the token team to request a token freeze and wait for their response.
   Reveal Solution Discussion Select an answer first
5. 44expert · hard

   A DeFi protocol has a governance timelock of 48 hours and no emergency pause. An attacker is exploiting a vulnerability in a newly deployed contract. The team must decide between attempting a white-hat rescue or letting the exploit continue. What is the most critical factor in this decision?

   • AThe number of social media followers the protocol has.
   • BThe color scheme of the protocol's website.
   • CThe attacker's reputation in the community.
   • DThe potential financial loss versus the likelihood of a successful white-hat rescue before the timelock expires.
   Reveal Solution Discussion Select an answer first
6. 45foundation · easy

   Which of the following is a common DeFi threat that involves an attacker borrowing a large amount of a token to manipulate its price on a decentralized exchange (DEX) and profit from the resulting price movement?

   • AReentrancy attack
   • B51% attack
   • CFlash loan attack
   • DPhishing attack
   Reveal Solution Discussion Select an answer first