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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?

  • 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?

  • 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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