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DeFi Fundamentals Quiz
✍ 6 questions
🕑 ~3 minutes
✅ Instant results
Question 1 of 6
What does DeFi stand for?
A
Digital Finance
B
Decentralized Finance
C
Deferred Finance
D
Derivative Finance
DeFi stands for Decentralized Finance financial services built on blockchain networks using smart contracts instead of banks and intermediaries.
Question 2 of 6
What is a smart contract?
A
A legal agreement between two crypto companies
B
Self-executing code on a blockchain that enforces rules automatically
C
A type of hardware wallet
D
A government-approved crypto transaction
Smart contracts are programs stored on blockchains that execute automatically when conditions are met. They are the foundation of DeFi no humans required to enforce the rules.
Question 3 of 6
What is a liquidity pool?
A
A reserve of crypto held by an exchange
B
A smart contract holding reserves of tokens that enables decentralized trading
C
A savings account for crypto
D
A group of miners working together
Liquidity pools are smart contracts holding two or more tokens. Users trade against the pool rather than matching with other buyers and sellers. LPs who fund the pool earn fees.
Question 4 of 6
What is impermanent loss?
A
A permanent loss from a hack
B
The loss experienced by liquidity providers when token price ratios change vs when they deposited
C
Losing funds to gas fees
D
A tax on DeFi profits
Impermanent loss occurs when the prices of tokens in a liquidity pool diverge from when you deposited. You end up with less value than if you had simply held the tokens.
Question 5 of 6
What is TVL in DeFi?
A
Total Value Lost
B
Total Volume Listed
C
Total Value Locked
D
Token Value Limit
TVL (Total Value Locked) is the total amount of cryptocurrency deposited in a DeFi protocol. It is a key metric for measuring protocol size and user trust.
Question 6 of 6
Which of these is NOT a typical DeFi risk?
A
Smart contract bugs
B
Impermanent loss
C
Liquidation of collateral
D
Your bank reversing the transaction
DeFi is trustless and permissionless no bank is involved, so bank reversals do not apply. Real DeFi risks include smart contract exploits, impermanent loss, liquidations, and rug pulls.
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