CBCP Cryptocurrency and Digital Tokens 4

Question 1

What is a 'governance token' in the context of decentralized protocols?

Accepted Answer

A token that grants holders voting rights over protocol changes and treasury decisions

Answer

Governance tokens give holders the ability to propose and vote on protocol upgrades, parameter changes, and treasury allocations in a decentralized autonomous organization.

Question 2

What defines a 'deflationary' cryptocurrency model?

Accepted Answer

A token designed so its circulating supply decreases over time through burns or buybacks

Answer

Deflationary tokens use mechanisms like burns, transaction fee destruction, or buybacks to continuously reduce circulating supply, potentially increasing scarcity over time.

Question 3

Which of the following best describes 'yield farming' in DeFi?

Accepted Answer

Moving assets across protocols to maximize returns through liquidity provision and token rewards

Answer

Yield farming involves strategically deploying crypto assets across DeFi protocols to earn the highest combination of interest, fees, and incentive token rewards.

Question 4

What is the primary purpose of a 'token lockup' period following a cryptocurrency presale?

Accepted Answer

To prevent early investors from immediately selling and crashing the token price at launch

Answer

Lockup periods restrict early investors and team members from selling their tokens immediately after listing, reducing sell pressure and protecting public investors.

Question 5

In cryptocurrency regulation, what does 'KYC/AML' require exchanges to do?

Accepted Answer

Verify user identities and monitor transactions for suspicious activity to prevent financial crimes

Answer

KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations require exchanges to verify user identities, maintain records, and report suspicious transactions to relevant authorities.

CBCP - Certified Blockchain Professional Practice Test

CBCP - Certified Blockchain Professional Practice Test

CBCP Cryptocurrency and Digital Tokens 4