Core Protocols and Liquidity Mechanisms in DeFi BFC Practice Questions (Page 9)

Questions 41–45

1. 41foundation · easy

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

   • AOracles are only available on centralized blockchains.
   • BOracles always provide delayed data, causing trades to execute at outdated prices.
   • COracles require users to pay high fees for every price query.
   • DOracle manipulation, where an attacker influences the price feed to exploit the protocol.
   Reveal Solution Discussion Select an answer first
2. 42expert · hard

   A DeFi lending protocol is considering adding a new collateral asset that is highly volatile. The protocol's risk team is debating the collateralization ratio and liquidation threshold. They want to minimize the risk of bad debt (unpaid loans) while not being overly restrictive for borrowers. What is the most important factor they should consider when setting these parameters?

   • AThe asset's correlation with the protocol's native token
   • BThe historical volatility of the asset and the reliability of the price oracle
   • CThe total market capitalization of the asset
   • DThe number of exchanges listing the asset
   Reveal Solution Discussion Select an answer first
4. 43foundation · easy

   How does staking differ from providing liquidity to an AMM?

   • AStaking is only available on centralized exchanges, while liquidity provision is only on decentralized platforms.
   • BStaking always offers higher returns than liquidity provision.
   • CStaking involves lending assets to borrowers, while liquidity provision involves borrowing assets.
   • DStaking locks assets to secure a network, while liquidity provision supplies assets to a pool to facilitate trading.
   Reveal Solution Discussion Select an answer first
5. 44foundation · easy

   What do liquidity providers receive when they deposit assets into a DeFi liquidity pool?

   • ALP tokens that represent their proportional share of the pool and can be used to claim fees.
   • BA governance token that gives voting rights in the protocol.
   • CA fixed interest payment in the pool's native token.
   • DA debt token that must be repaid to withdraw the deposited assets.
   Reveal Solution Discussion Select an answer first
6. 45foundation · easy

   Why do DeFi lending protocols typically require borrowers to over-collateralize their loans?

   • ATo comply with regulatory requirements for all DeFi platforms.
   • BTo allow borrowers to borrow more than the value of their collateral.
   • CTo increase the interest rate earned by lenders.
   • DTo protect lenders from default risk in a permissionless environment without credit checks.
   Reveal Solution Discussion Select an answer first