Solidity Solidity DeFi and Token Standards 1

Question 1

What is the ERC-20 `allowance` mechanism and what attack does it enable?

Accepted Answer

It lets owners approve spenders to transfer tokens, but a race condition allows double-spending if approval amount is changed

Answer

The ERC-20 approve/transferFrom pattern has a race condition: if a spender acts between an owner reducing allowance from N to M, they can spend N+M tokens total.

Question 2

What does the ERC-777 standard add over ERC-20?

Accepted Answer

Hooks that notify sender and recipient contracts on every transfer, enabling richer interactions without separate approve+transferFrom calls

Answer

ERC-777 adds `tokensToSend` and `tokensReceived` hooks called on registered operator and recipient contracts, enabling automatic reactions to transfers.

Question 3

What is a 'rebasing token' in DeFi and what challenge does it pose for Solidity integrations?

Accepted Answer

A token whose total supply and all balances adjust periodically, causing balance reads to return different values without transfer events

Answer

Rebasing tokens like AMPL adjust all account balances proportionally when supply changes, breaking protocols that cache balance snapshots between transactions.

Question 4

What is the ERC-4626 Tokenized Vault Standard used for?

Accepted Answer

Standardizing yield-bearing vaults with a common deposit/withdraw/shares interface

Answer

ERC-4626 defines a standard interface for yield vaults (deposit assets, receive shares, redeem shares for assets), enabling composable integration across DeFi protocols.

Question 5

What is 'slippage tolerance' in Solidity DEX contracts and how is it enforced?

Accepted Answer

A minimum output amount parameter in swap functions that reverts the transaction if the actual output is less than expected

Answer

DEX routers accept a `amountOutMin` parameter; if the actual amount received (after fees and price movement) is less, the transaction reverts, protecting users from excessive slippage.

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Solidity Practice Test

Solidity Solidity DeFi and Token Standards 1