Solidity Solidity DeFi and Token Standards 2

Question 1

What is a Chainlink oracle and why is it important for smart contracts?

Accepted Answer

A decentralized data feed network that provides tamper-resistant external data (like price feeds) to smart contracts

Answer

Chainlink aggregates data from multiple independent nodes and on-chain verification, providing smart contracts with reliable price feeds and off-chain data without trusting a single source.

Question 2

What is a 'price oracle manipulation' attack in DeFi?

Accepted Answer

Using flash loans or large trades to temporarily distort a price source that a vulnerable contract trusts for liquidations or borrowing

Answer

Attackers use large capital (often flash loans) to move prices on a DEX that a protocol uses as an oracle, triggering profitable liquidations or under-collateralized borrows.

Question 3

What is the difference between over-collateralized and under-collateralized lending in DeFi smart contracts?

Accepted Answer

Over-collateralized requires depositing collateral worth more than the loan; under-collateralized (like flash loans) relies on atomic repayment

Answer

Over-collateralized lending (Aave, Compound) requires collateral exceeding loan value for safety; flash loans are under-collateralized but must be repaid within the same transaction.

Question 4

What does the `health factor` represent in Aave's Solidity lending contracts?

Accepted Answer

A ratio above 1 meaning collateral exceeds borrowed value; when it drops below 1, the position can be liquidated

Answer

Health factor = (collateral in ETH × liquidation threshold) / (total borrows in ETH); below 1 means undercollateralized and the position is eligible for liquidation.

Question 5

What is 'liquidity mining' in the context of DeFi smart contract design?

Accepted Answer

Distributing governance or reward tokens to users who provide liquidity to a protocol, incentivized via staking contracts

Answer

Liquidity mining programs distribute protocol tokens to liquidity providers as yield, using staking contracts that track deposited LP tokens and accrue rewards over time.

Solidity Practice Test

Solidity Practice Test

Solidity Solidity DeFi and Token Standards 2