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Lesson # 5
Managing DeFi Risks Like an Analyst
Blockchain Basics
1. Which of the following is a common sign of a potential DeFi rug pull?
A. Transparent team with LinkedIn profiles
B. Public and recent audit report
C. Limited liquidity with withdrawal restrictions
D. Active GitHub with frequent commits
2. What is the main role of a smart contract audit in DeFi?
A. To generate high APY opportunities
B. To check the legal compliance of the project
C. To identify and document vulnerabilities in the code
D. To promote the token on centralized exchanges
3. Why are bug bounty programs important for DeFi protocols?
A. They increase token trading volume
B. They encourage users to stake more tokens
C. They offer ongoing security by incentivizing ethical hackers
D. They serve as marketing campaigns to attract investors
4. What does DeFi Safety primarily evaluate when scoring protocols?
A. Code originality and token rewards
B. Liquidity lock periods and APYs
C. Transparency, audit access, and testing practices
D. On-chain voting activity
5. If a DeFi protocol offers extremely high APYs with no clear explanation, what should an analyst do?
A. Stake immediately to maximize yield
B. Trust the project’s marketing
C. Investigate further, as it may signal unsustainable or risky design
D. Only ask the community if it’s safe