Role of DLT in Decentralized Finance (DeFi) BFC Practice Questions (Page 4)

Questions 16–20

1. 16expert · hard

   A team is building a decentralized lending dApp that must comply with anti-money laundering (AML) regulations. They are considering using a public blockchain for transparency, but they need to ensure only verified users can borrow. Which approach best balances decentralization with regulatory compliance?

   • AUse a public blockchain and rely on the community to report suspicious activity
   • BAvoid using smart contracts and instead use a centralized server to manage user verification
   • CBuild the dApp on a private blockchain where all users are known to the operators
   • DUse a smart contract that only allows addresses that have completed a decentralized identity (DID) verification process to borrow
   Reveal Solution Discussion Select an answer first
2. 17application · medium

   A developer is building a DeFi aggregator that automatically routes trades across multiple decentralized exchanges (DEXs) to get the best price. Which DLT feature makes this kind of composable application possible?

   • AThe use of off-chain oracles to fetch real-time prices from external markets
   • BThe ability of smart contracts on the same blockchain to call each other's functions
   • CThe immutability of transaction records preventing any changes to trade history
   • DThe ability to create sidechains for each DEX to isolate transactions
   Reveal Solution Discussion Select an answer first
4. 18application · medium

   A blockchain network is considering a switch from proof-of-work to proof-of-stake to reduce energy consumption. The network currently has a large number of miners. What is a key challenge they will face during the transition?

   • AThe network will become slower because PoS requires more computational power to validate transactions
   • BExisting miners may not have sufficient stake to become validators, leading to a concentration of power among early token holders
   • CThe network will lose all transaction history because the consensus mechanism changes
   • DProof-of-stake is less secure than proof-of-work, so the network will be more vulnerable to attacks
   Reveal Solution Discussion Select an answer first
5. 19application · medium

   A developer wants to create a decentralized application (dApp) that allows users to lend and borrow cryptocurrencies. The dApp must run on a blockchain and interact with smart contracts. Which component is essential for the dApp to function as intended?

   • AA frontend interface that connects to the blockchain via a wallet and calls smart contract functions
   • BA permissioned blockchain to ensure only approved users can access the dApp
   • CA native token that must be created specifically for the dApp to operate
   • DA centralized server to host the application's database and business logic
   Reveal Solution Discussion Select an answer first
6. 20foundation · easy

   Which characteristic is a defining feature of a distributed ledger technology (DLT) such as a blockchain?

   • AAll participants share a synchronized copy of the ledger, and consensus is used to agree on its state.
   • BThe ledger is stored on a single cloud provider's servers, and access is limited to that provider's clients.
   • CA single central authority controls all data updates and validates every transaction.
   • DTransactions are recorded only on a private server and can be edited by the administrator at any time.
   Reveal Solution Discussion Select an answer first