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What is the significance of Total Value Locked (TVL) in DeFi projects?
What is the significance of Total Value Locked (TVL) in DeFi projects?
- It determines the value of the tokens issued by the protocol
- It measures the success rate of the yield farming strategy
- It indicates the total amount of capital locked in the protocol (correct)
- It represents the number of users currently using the protocol
Why is it essential to have the smart contracts audited by a reputable source in DeFi projects?
Why is it essential to have the smart contracts audited by a reputable source in DeFi projects?
- To ensure the success of the yield farming strategy
- To attract more investors to the project
- To prevent malicious attacks on yield farming and DeFi protocols (correct)
- To increase the liquidity of the protocol
What is the risk associated with DeFi projects that are created by forking successful DeFi protocols?
What is the risk associated with DeFi projects that are created by forking successful DeFi protocols?
- They may not be able to generate yield for farmers
- They may fail due to network effects or a lack of liquidity
- They may attract fraudulent teams who create scams (correct)
- They may have a low Total Value Locked (TVL
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