Practice Test Geeks(CCE) Certified Cryptocurrency Expert Practice Test
← All CCE Flashcard Decks

DeFi and Decentralized Applications Flashcards

7 cards from real CCE 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 Decentralized Applications flashcards as text

  1. What is the primary purpose of a 'veToken' model (e.g., veCRV in Curve Finance)?

    Answer: To lock governance tokens and grant boosted rewards and voting power proportional to lock duration

    The vote-escrow model locks tokens for a chosen duration; longer locks yield more veTokens, granting greater governance influence and liquidity mining boosts.

  2. In a cross-chain bridge, what is a 'canonical' bridge versus a 'third-party' bridge?

    Answer: Canonical bridges are officially deployed by the Layer 2 or chain team; third-party bridges are built by external developers

    Canonical bridges are the official bridges operated by the Layer 2 protocol team and are generally considered more secure, while third-party bridges offer faster withdrawals with different trust assumptions.

  3. What does 'Total Value Locked' (TVL) measure in DeFi?

    Answer: The cumulative dollar value of assets deposited across a protocol's smart contracts

    TVL represents the aggregate value of crypto assets currently deposited and actively used within a DeFi protocol's smart contracts.

  4. Which vulnerability allowed the DAO hack in 2016 to drain approximately 3.6 million ETH?

    Answer: Reentrancy attack exploiting recursive external calls before state updates

    The attacker exploited a reentrancy vulnerability where the DAO's withdraw function sent ETH before updating the internal balance, allowing recursive calls to drain funds.

  5. What is 'yield farming' in DeFi?

    Answer: Actively moving assets across protocols to maximize returns from liquidity incentives and fees

    Yield farming involves strategically allocating assets across multiple DeFi protocols to maximize returns from a combination of trading fees, interest, and token incentives.

  6. In Uniswap v3, how do 'concentrated liquidity' positions differ from Uniswap v2?

    Answer: v3 allows LPs to allocate liquidity within custom price ranges, improving capital efficiency

    Uniswap v3's concentrated liquidity lets LPs specify a price range, concentrating capital where trading occurs and potentially earning more fees per dollar deposited.

  7. What is the Aave protocol's 'health factor' used for?

    Answer: Determining whether a borrower's collateral is sufficient to cover their debt and trigger liquidation if it falls below 1

    The health factor is a numeric representation of collateral safety; a value below 1.0 means the position is undercollateralized and eligible for liquidation.