Blockchain Applications in Financial Services BFC Practice Questions (Page 9)

Questions 41–42

1. 41expert · hard

   A DeFi exchange wants to offer leveraged trading. They are considering using smart contracts to manage margin calls and liquidations. The team is concerned about the risk of cascading liquidations during market crashes. They also need to comply with regulations that require consumer protection, such as ensuring that users understand the risks. Which approach best addresses these concerns?

   • AAllow users to set their own liquidation thresholds without any platform oversight.
   • BUse a single large liquidation event to clear positions quickly and reduce system load.
   • CDisable leveraged trading entirely to avoid liquidation risks.
   • DImplement a liquidation mechanism with a gradual liquidation process and require users to complete a risk acknowledgment before trading.
   Reveal Solution Discussion Select an answer first
2. 42application · medium

   A global payments company wants to use blockchain for cross-border transactions. They must comply with the General Data Protection Regulation (GDPR), which includes the right to erasure. Which blockchain design best addresses this compliance requirement?

   • AA permissioned blockchain with off-chain storage of personal data and on-chain hashes.
   • BA private blockchain that stores all personal data on-chain.
   • CA blockchain that encrypts personal data and stores the encryption key on-chain.
   • DA public blockchain where all transaction data is permanently stored.
   Reveal Solution Discussion Select an answer first