CBSE DeFi and Token Security

Question 1

What is a flash loan attack in the context of DeFi security?

Accepted Answer

Borrowing a large uncollateralized loan within a single transaction to manipulate prices and exploit protocols

Answer

An attack that overloads the network with loan requests

Answer

A social engineering attack targeting loan officers

Answer

A front-running attack on lending protocol liquidations

Question 2

Which vulnerability type allows an attacker to repeatedly call a DeFi protocol's withdrawal function before the balance is updated?

Accepted Answer

Reentrancy

Answer

Integer overflow

Answer

Front-running

Answer

Signature replay

Question 3

What is price oracle manipulation in DeFi, and why is it dangerous?

Accepted Answer

Using flash loans or low-liquidity pools to distort on-chain price feeds, causing protocols to mis-price assets

Answer

Altering block timestamps to change staking rewards

Answer

Intercepting API calls between oracles and exchanges

Answer

Modifying the Chainlink node software

Question 4

A token contract includes a hidden mint function accessible only to the deployer. What security risk does this represent?

Accepted Answer

A backdoor allowing unlimited token creation, enabling rug pulls and inflation attacks

Answer

Increased gas costs for transfers

Answer

Slower block confirmation times

Answer

Reduced ERC-20 compliance

Question 5

What is a 'sandwich attack' in DeFi trading?

Accepted Answer

Front-running a victim's transaction and back-running it to profit from the price impact

Answer

An attack that wraps malicious code around legitimate contract calls

Answer

A double-spend attempt on AMM pools

Answer

A Sybil attack on liquidity providers

Question 6

Which ERC standard is specifically designed to prevent token approval exploits by introducing permit-based approvals?

Accepted Answer

ERC-2612

Answer

ERC-20

Answer

ERC-721

Answer

ERC-1155