Smart Contracts for Finance BFC Practice Questions (Page 8)

Questions 36–40

1. 36expert · hard

   A team is developing a smart contract for a decentralized pension fund. The contract must allow participants to withdraw their contributions after a vesting period, but the team is concerned about the contract becoming permanently stuck if a participant loses their private key. Which design best addresses this risk while preserving the contract's automated nature?

   • ABurn the funds if the participant does not claim them within a certain period.
   • BSet a time lock that automatically sends the funds to the participant's address after the vesting period, regardless of key loss.
   • CInclude a function that allows the contract owner to withdraw funds on behalf of any participant.
   • DImplement a social recovery mechanism that allows a designated set of guardians to transfer the participant's funds to a new address after a waiting period.
   Reveal Solution Discussion Select an answer first
2. 37expert · hard

   A team is deploying a smart contract for a decentralized pension fund. The contract must allow participants to contribute over time and withdraw at retirement age. The team is concerned about the contract becoming obsolete if regulations change. Which lifecycle strategy best addresses this concern while maintaining trust?

   • AUse an upgradeable proxy pattern with a decentralized governance mechanism to approve changes.
   • BInclude a self-destruct function that can be called by the contract owner.
   • CMake the contract immutable and require a new contract to be deployed for any changes.
   • DUse a time-lock that delays all changes by one year.
   Reveal Solution Discussion Select an answer first
4. 38expert · hard

   A multinational corporation wants to use a smart contract to automate royalty payments to content creators in multiple countries. The contract must handle varying tax withholding requirements in each jurisdiction. Which design best addresses this complexity?

   • AAvoid smart contracts and use a traditional payroll system to handle taxes.
   • BUse a single flat tax rate for all creators to simplify the contract.
   • CDistribute the full amount to creators and let them handle their own taxes.
   • DIntegrate a tax-calculation module that uses jurisdiction-specific rules and withholds the correct amount before distributing the remainder.
   Reveal Solution Discussion Select an answer first
5. 39foundation · easy

   What is the correct sequence of the smart contract lifecycle in a financial context?

   • ACreation, deployment, execution, termination
   • BExecution, creation, deployment, termination
   • CCreation, execution, deployment, termination
   • DDeployment, creation, execution, termination
   Reveal Solution Discussion Select an answer first
6. 40expert · hard

   A smart contract for a decentralized lending protocol allows users to borrow against their crypto collateral. The contract uses a liquidation mechanism that triggers when the collateral value falls below a threshold. An attacker finds a way to manipulate the price oracle to trigger false liquidations. The team must fix this while minimizing disruption to legitimate users. Which approach is best?

   • AUse a time-weighted average price (TWAP) from a decentralized exchange to reduce the impact of short-term price manipulation.
   • BIncrease the liquidation threshold to a very high level so that false liquidations are less likely.
   • CDisable liquidations entirely until the oracle issue is resolved.
   • DAllow the protocol administrator to manually set the price whenever the oracle is suspected of manipulation.
   Reveal Solution Discussion Select an answer first