Practice Test Geeks(CCE) Certified Cryptocurrency Expert Practice Test
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Crypto Trading and Exchanges Flashcards

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  1. What is 'impermanent loss' for a liquidity provider on a DEX?

    Answer: The opportunity cost from price divergence of pooled assets compared to simply holding them

    Impermanent loss occurs when the price ratio of pooled tokens changes after deposit, causing the LP to hold less value than if they had simply held the tokens.

  2. Which exchange type requires no account registration and allows peer-to-peer trading directly from wallets?

    Answer: Decentralized exchange (DEX)

    DEXs enable non-custodial, permissionless trading directly from users' wallets via smart contracts, with no account or identity verification required.

  3. What does 'open interest' measure in crypto futures markets?

    Answer: The total number of outstanding futures contracts that have not been settled

    Open interest is the total number of active, unsettled futures or options contracts, used as an indicator of market participation and trend strength.

  4. What is 'front-running' in the context of decentralized exchanges?

    Answer: Exploiting mempool transaction visibility to insert a trade ahead of a pending transaction for profit

    Front-running on DEXs occurs when bots (MEV bots) detect pending transactions in the mempool and pay higher gas fees to insert their own transactions first for profit.

  5. In crypto trading, what does a 'long' position mean?

    Answer: Buying an asset expecting the price to rise

    A long position means buying an asset with the expectation that its price will increase, allowing you to sell at a higher price for a profit.

  6. What is the role of a 'crypto custodian' for institutional traders?

    Answer: To securely store private keys and digital assets on behalf of institutional clients

    A crypto custodian provides secure, regulated storage of private keys and digital assets, often required by institutional investors and regulated funds.

  7. What is 'basis' in the context of crypto futures trading?

    Answer: The difference between the futures contract price and the spot price of the underlying asset

    Basis is the spread between a futures contract price and the current spot price; a positive basis (contango) means futures trade above spot.