DeFi and Decentralized Protocols Flashcards
6 cards from real Cryptocurrency practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 DeFi and Decentralized Protocols flashcards as text
What is yield farming in DeFi?
Answer: Moving crypto assets between protocols to maximize returns
Yield farming involves strategically moving crypto assets across different DeFi protocols to maximize interest, fees, and token rewards.
What is TVL (Total Value Locked) a measure of in DeFi?
Answer: The total dollar value of assets deposited in a DeFi protocol
TVL represents the aggregate value of all assets deposited in a DeFi protocol, used as a key metric for platform adoption and health.
In DeFi lending protocols like Aave or Compound, what is over-collateralization?
Answer: Providing collateral worth more than the loan amount
Over-collateralization requires borrowers to deposit collateral worth more than the loan to protect lenders against price volatility.
What is a flash loan in DeFi?
Answer: An uncollateralized loan that must be borrowed and repaid within a single transaction
A flash loan is an uncollateralized loan that must be borrowed and repaid within the same blockchain transaction, or the entire transaction reverts.
What does APY stand for in DeFi yield calculations?
Answer: Annual Percentage Yield
APY stands for Annual Percentage Yield, which includes the effect of compounding interest over a year.
What is a stablecoin in the context of DeFi?
Answer: A token pegged to a stable asset like the US dollar
A stablecoin is a cryptocurrency designed to maintain a stable value by pegging to a reserve asset such as the US dollar.