Crypto Trading Crypto Trading DeFi and Exchanges 2

Question 1

What is 'yield farming' in DeFi?

Accepted Answer

Strategically moving crypto assets across DeFi protocols to maximize returns from interest, fees, and token rewards

Answer

Yield farming involves deploying capital across DeFi platforms—lending, liquidity pools, staking—to earn the highest possible APY, often including governance token rewards.

Question 2

What is a 'flash loan' in DeFi?

Accepted Answer

An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction

Answer

Flash loans allow users to borrow large amounts with no collateral as long as the loan is repaid within the same transaction block, enabling arbitrage and other strategies.

Question 3

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

Accepted Answer

The aggregate dollar value of crypto assets deposited and actively used within a DeFi protocol

Answer

TVL is the sum of all crypto assets deposited into a protocol's smart contracts and is widely used to gauge the size, adoption, and health of a DeFi project.

Question 4

What is a 'stablecoin' and why is it important in crypto trading?

Accepted Answer

A cryptocurrency designed to maintain a stable value, usually pegged to a fiat currency, providing a safe haven during volatility

Answer

Stablecoins like USDT and USDC maintain a 1:1 peg to fiat currencies, giving traders a way to exit volatile positions without converting back to fiat.

Question 5

What is 'MEV' (Maximal Extractable Value) in crypto trading?

Accepted Answer

The profit that validators or bots can extract by reordering, inserting, or censoring transactions within a block

Answer

MEV refers to the extra profit validators or searcher bots can capture by manipulating transaction ordering within a block, often at the expense of regular users.

Crypto Trading Practice Test

Crypto Trading Practice Test

Crypto Trading Crypto Trading DeFi and Exchanges 2