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Smart Contracts and dApps Flashcards

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  1. What is 'flash loan' arbitrage in DeFi?

    Answer: Borrowing and repaying a large uncollateralized loan within a single transaction to exploit price differences

    Flash loans are uncollateralized loans that must be borrowed and repaid within one atomic transaction; traders use them to exploit price discrepancies across DEXs at scale.

  2. Which consensus component do Ethereum smart contracts rely on for deterministic execution across all nodes?

    Answer: The EVM (Ethereum Virtual Machine)

    Every full node runs the same EVM, ensuring that executing the same smart contract bytecode with the same inputs always produces identical outputs, enabling consensus.

  3. What is 'slippage' in the context of a decentralized exchange (DEX)?

    Answer: The difference between the expected price of a trade and the price at which it executes

    Slippage occurs when large trades or low liquidity move the pool price between order submission and execution, causing the actual fill price to differ from the quoted price.

  4. In the context of dApps, what is 'wallet connect'?

    Answer: An open protocol that links mobile wallets to desktop dApps via QR code

    WalletConnect is a protocol that creates an encrypted connection between a dApp and a user's mobile wallet by scanning a QR code, enabling transaction signing without exposing private keys.

  5. What is the role of 'events' in a Solidity smart contract?

    Answer: They emit logs that off-chain applications can listen to and index

    Events emit structured log data to the transaction receipt, allowing front-end applications and indexers (like The Graph) to efficiently track on-chain activity without querying the full state.

  6. What distinguishes an 'EOA' from a 'contract account' on Ethereum?

    Answer: EOAs are controlled by private keys and cannot hold code; contract accounts hold EVM bytecode

    Externally Owned Accounts (EOAs) are controlled by a private key and contain no code, while contract accounts are governed entirely by their deployed EVM bytecode.

  7. What is 'impermanent loss' for a liquidity provider in an AMM?

    Answer: The opportunity cost vs. simply holding when token prices diverge after depositing into a pool

    Impermanent loss occurs when the price ratio of pooled tokens changes from the time of deposit, causing the LP's withdrawn value to be less than if they had just held the tokens.