DeFi Protocols and Their Financial Functions BDC Practice Questions (Page 8)

Questions 36–40

1. 36foundation · easy

   What is a common risk associated with using oracles in DeFi?

   • AOracle manipulation, where an attacker provides false data to exploit the protocol.
   • BOracles can only provide data from centralized sources.
   • COracles are always slow and cause delays.
   • DOracles are expensive to deploy.
   Reveal Solution Discussion Select an answer first
2. 37expert · hard

   A DeFi protocol combines a lending platform with an AMM. Users can borrow tokens by providing LP tokens as collateral. An attacker uses a flash loan to manipulate the AMM price, causing the value of the LP tokens to drop, which triggers liquidation of many positions. What is the most effective mitigation?

   • AIncrease the collateralization ratio to 200%
   • BAdd a circuit breaker that pauses the protocol when large price changes are detected
   • CDisallow LP tokens as collateral
   • DUse a time-weighted average price (TWAP) oracle instead of a spot price oracle
   Reveal Solution Discussion Select an answer first
4. 38application · medium

   A developer wants to create a composite token that automatically earns yield from multiple lending protocols. The token should rebalance its allocation based on interest rates. What is the most appropriate approach?

   • ACreate a smart contract that holds funds and calls the deposit functions of each lending protocol
   • BCreate a token that is minted and burned based on the total value locked in the protocols
   • CUse a yield aggregator protocol that automatically moves funds to the highest-yielding protocol
   • DUse a lending protocol that offers a fixed interest rate
   Reveal Solution Discussion Select an answer first
5. 39foundation · easy

   What is liquidity mining specifically?

   • AA process where users provide liquidity to a pool and receive protocol tokens as a reward.
   • BA process of borrowing assets to increase returns.
   • CA process of mining new blocks on a proof-of-work blockchain.
   • DA process of creating synthetic assets.
   Reveal Solution Discussion Select an answer first
6. 40foundation · easy

   What is composability in DeFi?

   • AThe ability of different DeFi protocols to interact and build upon each other, like lego blocks.
   • BThe ability of a protocol to run on multiple blockchains.
   • CThe ability of users to compose messages on-chain.
   • DThe ability of a protocol to upgrade its smart contracts.
   Reveal Solution Discussion Select an answer first