Blockchain Security Training DeFi Security and Audits 2

Question 1

In a flash loan attack, what makes the borrowed capital risk-free for the attacker?

Accepted Answer

The loan is borrowed and repaid within a single atomic transaction

Answer

Flash loans must be repaid in the same transaction, so if repayment fails the entire transaction reverts, leaving the attacker no downside.

Question 2

A DeFi lending protocol uses a single DEX spot price as its oracle. What is the primary vulnerability?

Accepted Answer

Price oracle manipulation via large swaps or flash loans

Answer

Spot prices from a single liquidity pool can be skewed instantly by a large trade, letting an attacker manipulate collateral valuations.

Question 3

Which mitigation best protects against oracle price manipulation?

Accepted Answer

Using a time-weighted average price (TWAP) or multiple oracle sources

Answer

TWAPs and aggregated oracles like Chainlink smooth out short-term price spikes, making single-transaction manipulation impractical.

Question 4

What is 'impermanent loss' in an automated market maker (AMM)?

Accepted Answer

The loss a liquidity provider incurs versus simply holding the tokens when prices diverge

Answer

When the relative price of pooled assets changes, LPs end up with less value than if they had held the tokens, a divergence loss called impermanent loss.

Question 5

An auditor finds a function that updates state after making an external call. What pattern should be enforced?

Accepted Answer

Checks-Effects-Interactions

Answer

Checks-Effects-Interactions requires updating internal state before any external call, preventing reentrancy exploitation.

Blockchain Practice Test

Blockchain Practice Test

Blockchain Security Training DeFi Security and Audits 2