Smart Contract Risks BFC Practice Questions (Page 3)

Questions 11–15

1. 11application · medium

   A fintech startup is deploying a lending protocol where users can deposit collateral and take flash loans. The team is concerned about a specific attack pattern where a malicious contract re-enters the lending function before the state is updated, draining funds. Which mitigation strategy directly addresses this vulnerability?

   • AIncrease the gas limit for transactions
   • BUse a more recent version of the Solidity compiler
   • CImplement a reentrancy guard that locks the contract during execution
   • DRely on the blockchain's consensus mechanism to detect the attack
   Reveal Solution Discussion Select an answer first
2. 12expert · hard

   A multinational corporation is deploying a smart contract for cross-border trade finance. The contract will be used by parties in the EU, the US, and Asia. The legal team is concerned about data residency requirements and the enforceability of the contract across jurisdictions. What is the most effective way to address these legal risks?

   • AMake the contract immutable to ensure enforceability
   • BDesign the contract to comply with the strictest applicable regulations and include a dispute resolution mechanism
   • CRely on the contract's code as the sole legal agreement
   • DDeploy the contract on a private blockchain to avoid data residency issues
   Reveal Solution Discussion Select an answer first
4. 13expert · hard

   A decentralized lending platform relies on a price oracle to determine collateral values. The oracle is a single centralized service that has been reliable but is a known single point of failure. The team is considering switching to a decentralized oracle network, but this will increase transaction costs and latency. What is the best decision?

   • AKeep the centralized oracle to minimize costs
   • BRemove the oracle and use a fixed price
   • CSwitch to a decentralized oracle network despite the higher cost and latency
   • DUse a hybrid approach with both centralized and decentralized oracles
   Reveal Solution Discussion Select an answer first
5. 14application · medium

   A global remittance service is using a smart contract to automate cross-border payments. They are concerned about compliance with anti-money laundering (AML) regulations. What is the best way to address this regulatory risk?

   • AIntegrate identity verification and transaction monitoring into the contract
   • BMake the contract anonymous to protect user privacy
   • CRely on the blockchain's immutability to prove compliance
   • DUse a private blockchain to avoid AML regulations
   Reveal Solution Discussion Select an answer first
6. 15application · medium

   A blockchain-based supply chain finance platform uses a smart contract that processes a high volume of transactions. The contract is becoming slow and expensive to run. What is the most effective way to address this performance limitation?

   • AMove the contract to a different blockchain with lower fees
   • BOptimize the contract's code to reduce gas consumption
   • CIncrease the block gas limit on the network
   • DUse off-chain computation for all logic
   Reveal Solution Discussion Select an answer first