Ethereum Developer Ethereum Token Standards and DeFi 2 β Questions and Answers
Question 1: What is the purpose of the ERC-1155 multi-token standard?
- To manage multiple token types (fungible and non-fungible) in a single contract (Correct answer)
- To enable cross-chain token transfers
- To replace ERC-20 with better gas efficiency
- To define royalty standards for NFT marketplaces
Correct answer: To manage multiple token types (fungible and non-fungible) in a single contract
ERC-1155 allows a single smart contract to manage both fungible and non-fungible tokens, reducing deployment costs and complexity.
Question 2: What does TVL stand for in DeFi protocols?
- Total Value Locked (Correct answer)
- Token Vault Liquidity
- Transaction Volume Limit
- Total Verified Loans
Correct answer: Total Value Locked
Total Value Locked (TVL) measures the total value of assets deposited and held within a DeFi protocol's smart contracts.
Question 3: What is a liquidity pool in the context of DeFi?
- A smart contract holding reserves of two or more tokens used to facilitate trading (Correct answer)
- A smart contract that distributes yield to stakers
- An escrow service for peer-to-peer trades
- A contract that bridges assets between blockchains
Correct answer: A smart contract holding reserves of two or more tokens used to facilitate trading
A liquidity pool is a smart contract containing token reserves provided by liquidity providers, enabling decentralized trading.
Question 4: What is impermanent loss in DeFi liquidity provision?
- The temporary loss experienced by liquidity providers due to price divergence of pooled assets (Correct answer)
- Fees lost when a transaction fails
- Value lost to slippage on large trades
- Loss from smart contract exploits
Correct answer: The temporary loss experienced by liquidity providers due to price divergence of pooled assets
Impermanent loss occurs when the price ratio of pooled tokens changes from the deposit ratio, making holding preferable to providing liquidity.
Question 5: What is the primary function of a lending protocol like Aave or Compound?
- Allow users to deposit assets to earn interest and borrow against collateral (Correct answer)
- Facilitate NFT auctions on-chain
- Provide decentralized insurance for smart contract risk
- Create synthetic exposure to off-chain assets
Correct answer: Allow users to deposit assets to earn interest and borrow against collateral
Lending protocols match lenders who supply assets for yield with borrowers who provide overcollateralized deposits to take loans.
Question 6: What does EIP-2612 add to the ERC-20 standard?
- Permit functionality enabling gasless approvals via off-chain signatures (Correct answer)
- Native cross-chain transfer support
- Built-in minting and burning functions
- Token metadata storage on-chain
Correct answer: Permit functionality enabling gasless approvals via off-chain signatures
EIP-2612 adds the `permit()` function, allowing ERC-20 approvals via signed messages without requiring a separate on-chain approval transaction.
Ethereum Developer Ethereum Token Standards and DeFi 2
What is the purpose of the ERC-1155 multi-token standard?