CCI Smart Contracts and DeFi Investigations 2

Question 1

What is a Decentralized Exchange (DEX)?

Accepted Answer

A platform that facilitates peer-to-peer crypto trading via smart contracts without a central authority

Answer

A DEX is a peer-to-peer marketplace where transactions occur directly on the blockchain through smart contracts, without a central intermediary controlling funds or requiring identity verification.

Question 2

Why is tracing funds through DeFi protocols particularly challenging for cryptocurrency investigators?

Accepted Answer

DeFi protocols can route funds across multiple pools, contracts, and chains, obscuring the trail

Answer

DeFi protocols create investigative challenges because funds can rapidly pass through multiple smart contracts, liquidity pools, and cross-chain bridges, creating complex layered transaction trails that are difficult to follow.

Question 3

What is the primary purpose of a security audit in smart contract development?

Accepted Answer

To identify vulnerabilities and coding flaws before deployment

Answer

Smart contract audits involve expert review of code to identify security vulnerabilities, logic errors, and potential exploits before the contract is deployed to the immutable blockchain.

Question 4

What is a re-entrancy attack in smart contract security?

Accepted Answer

When an attacker forces a smart contract to call an external contract before completing its own state updates

Answer

A re-entrancy attack occurs when a malicious contract repeatedly calls back into the victim contract before the first execution's state updates are complete, allowing repeated unauthorized fund withdrawals.

Question 5

What is a liquidity pool in DeFi?

Accepted Answer

A smart contract holding reserves of two or more tokens to enable automated trading

Answer

A liquidity pool is a collection of funds locked in a smart contract that provides liquidity for decentralized trading, with liquidity providers earning a share of trading fees in return.

CCI - Certified Cryptocurrency Investigator Practice Test

CCI - Certified Cryptocurrency Investigator Practice Test

CCI Smart Contracts and DeFi Investigations 2