Comparing TradFi, CeFi, and DeFi BFC Practice Questions (Page 2)

Questions 6–10

1. 6application · medium

   A DeFi protocol's governance token holders are voting on whether to implement a KYC/AML module for users. The protocol currently operates without any identity verification. Which regulatory pressure is most likely driving this proposal?

   • AThe need to comply with anti-money laundering regulations that may soon apply to DeFi protocols.
   • BThe desire to reduce smart contract risk by adding more code to the protocol.
   • CThe need to improve user experience by simplifying the onboarding process.
   • DThe requirement to obtain a banking license, which necessitates KYC procedures.
   Reveal Solution Discussion Select an answer first
2. 7expert · hard

   A consortium of agricultural cooperatives wants to create a supply-chain financing platform for smallholder farmers. The farmers lack formal credit histories and collateral. The consortium is considering a DeFi protocol that uses tokenized crop yields as collateral. Which use case is most directly enabled by DeFi in this scenario?

   • AYield farming, allowing farmers to earn interest on their idle assets.
   • BDecentralized identity, allowing farmers to establish a credit history without a bank.
   • CAutomated market making, providing liquidity for trading crop tokens.
   • DTokenization of real-world assets, allowing farmers to use their future crop yields as collateral for loans.
   Reveal Solution Discussion Select an answer first
4. 8application · medium

   A global e-commerce company wants to offer its customers the ability to pay with cryptocurrencies. They want a solution that provides a familiar checkout experience, handles currency conversion, and offers buyer protection. Which model should they integrate?

   • AA DeFi payment protocol, because it is the most innovative.
   • BA CeFi payment processor, because it can provide fiat conversion, merchant services, and dispute resolution.
   • CA TradFi credit card network, because it already supports crypto payments.
   • DA direct peer-to-peer crypto transfer, because it is the cheapest.
   Reveal Solution Discussion Select an answer first
5. 9expert · hard

   A global bank is evaluating whether to use a CeFi exchange or a DeFi protocol for its institutional custody services. The bank's compliance team requires that all transactions be traceable to specific legal entities for AML reporting. Which model presents a greater challenge to this requirement?

   • ANeither, because blockchain analytics can always identify users.
   • BDeFi, because users interact through pseudonymous wallet addresses without mandatory KYC.
   • CCeFi, because exchanges often mix customer funds.
   • DBoth are equally challenging because blockchain is transparent.
   Reveal Solution Discussion Select an answer first
6. 10expert · hard

   A DeFi protocol has suffered a major exploit due to a smart contract vulnerability, resulting in the loss of user funds. The community is split between forking the protocol to reverse the transaction and maintaining the immutability of the blockchain. Which of the following best captures the trade-off?

   • AForking is always the best solution because it restores user funds.
   • BThe decision involves a trade-off between user protection and the principle of immutability, with no universally correct answer.
   • CThe protocol should be abandoned and users should accept the loss as a cost of using DeFi.
   • DMaintaining immutability is always the best solution because it preserves the integrity of the blockchain.
   Reveal Solution Discussion Select an answer first