What is a smart contract?
A A legal agreement between companies B A program stored on a blockchain that executes automatically when conditions are met C A special type of cryptocurrency wallet D An encrypted message between two parties at all times in every case within the system
Explanation
Smart contracts are self-executing programs on the blockchain, not legal documents.
What is the key difference between an EOA and a Contract Account on Ethereum?
A EOAs can hold more ETH than Contract Accounts B Contract Accounts are controlled by code; EOAs are controlled by private keys C Only Contract Accounts can send transactions D EOAs exist on Bitcoin; Contract Accounts only on Ethereum by design in most systems
Explanation
EOAs are controlled by humans via private keys; Contract Accounts are controlled by their deployed code.
Which statement best distinguishes Ethereum from Bitcoin?
A Ethereum is faster than Bitcoin in all metrics B Bitcoin uses accounts while Ethereum uses UTXOs in all scenarios across the network in standard protocols C Ethereum supports Turing-complete programmable logic; Bitcoin uses a limited scripting language D Only Ethereum uses cryptographic hashing
Explanation
Ethereum’s key innovation is Turing-complete computation on the blockchain.
What is the difference between a token and a coin?
A Tokens are more valuable than coins B Coins can only be used for payments; tokens can represent anything by consensus rules in all scenarios C A coin has its own blockchain; a token lives as a smart contract on another blockchain D There is no difference; the terms are interchangeable
Explanation
BTC and ETH are coins with their own blockchains; USDC and UNI are tokens living on Ethereum.
A simple ETH transfer uses 21,000 gas. If the base fee is 30 gwei and the priority fee is 2 gwei, what is the total transaction cost in gwei?
A 630,000 gwei B 672,000 gwei C 420,000 gwei D 21,000 gwei
Explanation
21,000 × (30 + 2) = 21,000 × 32 = 672,000 gwei (= 0.000672 ETH).
Under EIP-1559, what happens to the base fee when blocks are consistently more than 50% full?
A It stays the same B It increases by up to 12.5% per block C It decreases to attract more transactions D It is set by validator vote
Explanation
EIP-1559 increases the base fee by up to 12.5% per block when utilization exceeds 50%.
Alice wants a DEX to trade 100 USDC for DAI. What is the correct sequence?
A Alice calls approve(DEX, 100) on USDC, then calls swap() on the DEX B Alice calls transfer() on the DEX, then the DEX sends DAI C The DEX automatically reads Alice’s USDC balance and swaps D Alice sends USDC directly to the DAI contract
Explanation
The two-step pattern: first approve the DEX to spend tokens, then call the swap function.
Alice has 100 tokens. She calls transfer(Bob, 30). What are the final balances?
A Alice: 70, Bob: 30 B Alice: 100, Bob: 30 C Alice: 0, Bob: 130 D Alice: 130, Bob: 0
Explanation
Transfer subtracts from sender and adds to receiver: Alice 100-30=70, Bob 0+30=30.
A game studio needs a single contract to handle both in-game currency (fungible) and unique weapons (non-fungible). Which standard is best?
A ERC-20 for currency, deploy a separate ERC-721 for weapons B ERC-721 for everything C ERC-1155, which supports both fungible and non-fungible tokens in one contract D A custom standard that combines ERC-20 and ERC-721
Explanation
ERC-1155 handles both fungible and non-fungible tokens with batch operations in one contract.
Why does SSTORE (writing to storage) cost approximately 6,000 times more gas than ADD (arithmetic)?
A Storage operations require more CPU cycles B SSTORE was intentionally overpriced to discourage usage C Storage data persists on every node forever, while arithmetic is temporary D ADD operations are subsidized by the Ethereum Foundation
Explanation
Storage writes persist forever across all nodes; arithmetic results are temporary and discarded.
What is the correct order when deploying a smart contract?
A Write code, deploy transaction, get address, compile, users interact in this context at the system level B Compile, write code, deploy, test, get address C Write code, compile to bytecode, deploy via transaction, contract gets address, users call functions D Get address, write code, compile, deploy, test
Explanation
The deployment pipeline: write → compile → deploy transaction → address assigned → callable.
What does the ABI (Application Binary Interface) provide?
A The private key to access the contract B A backup copy of the contract’s source code C The gas cost of every operation D A description of the contract’s functions and how to call them
Explanation
The ABI is the “menu” – it tells wallets and dApps what functions exist and how to call them.
Why does a reentrancy attack succeed?
A The attacker breaks the cryptographic hashing B The EVM has a known bug in its arithmetic C The attacker guesses the contract’s private key across all nodes in distributed systems D The contract sends funds before updating its internal balance records
Explanation
Reentrancy exploits the ordering error: send first, update state later allows recursive withdrawals.
The Ethereum community hard-forked after The DAO hack. Which principle did this violate?
A Decentralization B Composability C Transparency D Immutability
Explanation
The fork reversed transactions, violating the principle that blockchain history cannot be changed.
In a DeFi composability stack, why does a bug in a lending protocol potentially crash a DEX aggregator built on top?
A The aggregator depends on the lending protocol’s contracts, creating cascading failure risk B They share the same source code C All DeFi protocols share a single database D DEX aggregators copy the lending protocol’s balance sheet in the protocol for each transaction
Explanation
Composability means each layer depends on layers below; a failure cascades upward through the stack.
Bitcoin uses UTXO while Ethereum uses accounts. What trade-off does Ethereum’s account model make?
A Ethereum sacrifices privacy for simpler smart contract state management B Ethereum sacrifices speed for better security C Ethereum uses more storage but processes transactions faster D There is no meaningful trade-off; accounts are strictly better
Explanation
Account model simplifies contract state but makes it easier to track balances, reducing privacy.
“Immutability means your best code and your worst bugs both live forever.” Why is this simultaneously a feature and a threat?
A Feature: nobody can change it; Threat: nobody can change it – the same property serves both roles B Feature: it is fast; Threat: it is expensive C Feature: it is transparent; Threat: it is complicated under normal conditions in practice for all participants D Feature: it is decentralized; Threat: it is slow
Explanation
The inability to modify deployed code prevents censorship (feature) but prevents bug fixes (threat).
DeFi TVL exceeds $120 billion. What does this metric actually represent?
A The total market capitalization of all DeFi tokens B The total value of assets deposited in DeFi smart contracts C The daily trading volume across all decentralized exchanges D The total fees collected by DeFi protocols
Explanation
TVL measures crypto assets locked in DeFi protocols, not market cap or trading volume.
A company wants to use a smart contract for escrow: hold funds until both parties confirm delivery. Is this appropriate?
A No, escrow is too complex for smart contracts B Yes, but only if the contract can be modified after deployment for the network in all cases C No, smart contracts cannot hold funds D Yes, this is an ideal use case – clear conditions, automatic execution, transparent rules
Explanation
Escrow with clear conditions is a textbook smart contract use case: hold until condition met, then release.
A protocol promises 20% annual yield on staked ETH, funded entirely from new deposits. Applying the safety framework, which question reveals the critical flaw?
A Question 1: Is it audited? across the network always always always always always always always always always B Question 3: Who holds admin keys? in standard protocols always always always always always always always always C Question 4: Oracle dependencies? under normal conditions always always always always always always always always D Question 5: What is the worst-case loss? (Ponzi structure – yield from deposits, not productive activity)
Explanation
If yield comes from new deposits rather than productive activity, it is unsustainable – a Ponzi structure.
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