Ethereum Developer Ethereum Token Standards and DeFi 1 β Questions and Answers
Question 1: What EIP defines the ERC-20 fungible token standard?
- EIP-20 (Correct answer)
- EIP-721
- EIP-1155
- EIP-2612
Correct answer: EIP-20
EIP-20 (commonly called ERC-20) defines the standard interface for fungible tokens on Ethereum.
Question 2: What function must an ERC-20 contract implement to allow a spender to transfer tokens on behalf of an owner?
- approve() (Correct answer)
- transfer()
- allowance()
- mint()
Correct answer: approve()
The `approve()` function grants a spender permission to transfer a specified amount of tokens on the owner's behalf.
Question 3: What is the key distinction between ERC-20 and ERC-721 tokens?
- ERC-721 tokens are non-fungible and each has a unique ID (Correct answer)
- ERC-721 tokens have higher decimal precision
- ERC-20 tokens represent ownership of NFTs
- ERC-721 allows batch transfers by default
Correct answer: ERC-721 tokens are non-fungible and each has a unique ID
ERC-721 tokens are non-fungible, meaning each token has a unique identifier and cannot be exchanged 1:1 with another.
Question 4: What does AMM stand for in the context of DeFi?
- Automated Market Maker (Correct answer)
- Autonomous Minting Mechanism
- Aggregated Margin Model
- Asset Management Module
Correct answer: Automated Market Maker
An Automated Market Maker (AMM) uses liquidity pools and mathematical formulas to enable permissionless token swaps without an order book.
Question 5: What formula does Uniswap v2 use to maintain liquidity pool balance?
- x * y = k (Correct answer)
- x + y = k
- x^2 + y^2 = k
- x / y = k
Correct answer: x * y = k
Uniswap v2 uses the constant product formula `x * y = k`, where x and y are token reserves and k is a constant.
Question 6: What is a flash loan in DeFi?
- An uncollateralized loan that must be borrowed and repaid within a single transaction (Correct answer)
- A loan with a very low interest rate
- A loan backed by NFT collateral
- A loan that expires after one block
Correct answer: An uncollateralized loan that must be borrowed and repaid within a single transaction
Flash loans allow users to borrow any amount without collateral as long as the loan is repaid within the same transaction block.
Ethereum Developer Ethereum Token Standards and DeFi 1
What EIP defines the ERC-20 fungible token standard?