DeFi and Tokenomics Flashcards
7 cards from real Blockchain Technology practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 DeFi and Tokenomics flashcards as text
What does DeFi stand for in the context of blockchain?
Answer: Decentralized Finance
DeFi stands for Decentralized Finance, referring to financial services built on blockchain networks without traditional intermediaries.
Which protocol pioneered the concept of Automated Market Makers (AMM) in DeFi?
Answer: Uniswap
Uniswap pioneered the AMM model using a constant product formula (x*y=k) to enable permissionless token swaps without order books.
What is a liquidity pool in DeFi?
Answer: A collection of tokens locked in a smart contract to facilitate trading
A liquidity pool is a collection of two or more tokens locked in a smart contract that provides liquidity for decentralized exchanges.
What is the primary purpose of a governance token in a DeFi protocol?
Answer: To allow holders to vote on protocol decisions
Governance tokens grant holders voting rights to propose and vote on changes to the protocol's parameters, upgrades, and treasury use.
What is 'yield farming' in DeFi?
Answer: Providing liquidity or staking assets to earn rewards across protocols
Yield farming involves moving assets across DeFi protocols to maximize returns by earning trading fees, interest, or token incentives.
What is 'impermanent loss' in the context of DeFi liquidity provision?
Answer: The temporary reduction in value compared to simply holding assets due to price divergence
Impermanent loss occurs when the price ratio of pooled assets changes after deposit, causing the LP's value to be less than if they had simply held the assets.
Which of the following best describes a stablecoin?
Answer: A token whose value is pegged to a stable asset like USD or gold
A stablecoin is a cryptocurrency designed to maintain a stable value by pegging to a reference asset such as the US dollar or a commodity.