Core Protocols and Liquidity Mechanisms in DeFi BFC Practice Questions (Page 6)

Questions 26–30

1. 26application · medium

   A trader submits a large swap on a DEX and sets a slippage tolerance of 1%. The transaction executes, but the trader receives fewer tokens than expected based on the current quote. Which factor is the most likely cause?

   • AThe trader's wallet applied a hidden fee
   • BThe trade moved the pool's price, and the execution price was within the 1% tolerance but worse than the quoted mid-price
   • CThe oracle price was manipulated during the transaction
   • DThe pool's total liquidity increased during the transaction
   Reveal Solution Discussion Select an answer first
2. 27application · medium

   A trader submits a large order to a DEX that uses a constant product AMM. The order executes but at a significantly worse price than the current market price. The trader notices the transaction was not front-run. What is the most likely explanation for the poor execution price?

   • AThe trader used a limit order instead of a market order
   • BThe trader set a very low slippage tolerance, causing the transaction to fail and retry at a worse price
   • CThe trade was large relative to the pool's liquidity, causing high price impact
   • DThe AMM charges a dynamic fee that increases with trade size
   Reveal Solution Discussion Select an answer first
4. 28application · medium

   A trader wants to swap 100 ETH for USDC on a DEX. The pool has 1,000 ETH and 4,000,000 USDC. The trader sets a slippage tolerance of 1%. The constant product formula applies (x*y=k). What is the most likely outcome of this trade?

   • AThe trade executes but the trader receives less USDC than expected due to the 1% fee
   • BThe trade executes at the current market price because the pool is large enough
   • CThe trade executes successfully because the price impact is within the 1% slippage tolerance
   • DThe trade reverts because the price impact exceeds the 1% slippage tolerance
   Reveal Solution Discussion Select an answer first
5. 29expert · hard

   A DeFi platform offers synthetic exposure to a stock index. The platform uses a collateralized debt position (CDP) model where users mint a synthetic token by locking collateral. Which risk is most critical for the platform to manage?

   • AThe oracle feeding the stock index price could be manipulated, leading to incorrect minting and redemption
   • BThe synthetic token's supply is not elastic enough to meet demand
   • CThe platform's governance token will be diluted by mining rewards
   • DThe stock index itself is not available on-chain
   Reveal Solution Discussion Select an answer first
6. 30application · medium

   A user provides liquidity to an AMM pool and receives LP tokens. What does the LP token represent, and what is its primary utility?

   • AA stablecoin pegged to the pool's total value
   • BA governance token that grants voting rights on all DeFi protocols
   • CA debt instrument that must be repaid with interest
   • DA claim on the underlying assets in the pool, which can be redeemed when the LP burns the token
   Reveal Solution Discussion Select an answer first