Role of DLT in Decentralized Finance (DeFi) BFC Practice Questions (Page 7)

Questions 31–35

1. 31application · medium

   A DeFi protocol is experiencing frequent network congestion and high transaction fees during peak usage. The development team is considering switching from proof-of-work to proof-of-stake to improve scalability and reduce costs. Which additional consideration should the team evaluate before making this change?

   • AThe security model changes from computational competition to economic staking, which may affect the protocol's resistance to certain attacks
   • BThe ledger will no longer be immutable because validators can alter past transactions
   • CThe network will no longer require any form of consensus because validators are trusted
   • DThe protocol will automatically become interoperable with other DeFi protocols
   Reveal Solution Discussion Select an answer first
2. 32application · medium

   A central bank is exploring the use of DLT to issue a digital currency (CBDC) that can be used for retail payments. They require the system to handle high transaction volumes and provide strong oversight. Which DLT model is most appropriate for this central bank use case?

   • AA public, permissionless blockchain to ensure maximum decentralization and transparency
   • BA hybrid model that uses a public blockchain for settlement and a private blockchain for retail transactions
   • CA permissioned DLT where the central bank and authorized financial institutions operate nodes and validate transactions
   • DA private blockchain operated solely by the central bank, with no other participants
   Reveal Solution Discussion Select an answer first
4. 33foundation · easy

   What is tokenization in the context of DLT and DeFi?

   • AThe process of encrypting a user's password to protect their wallet.
   • BThe process of creating a new cryptocurrency by copying an existing one.
   • CThe process of storing physical assets in a vault and issuing paper certificates.
   • DThe process of converting a physical or digital asset into a digital token on a distributed ledger.
   Reveal Solution Discussion Select an answer first
5. 34expert · hard

   A consortium of financial institutions is designing a DLT-based trade finance platform. They require high transaction throughput, privacy for transaction details, and finality of transactions. They are considering a permissioned blockchain with a practical Byzantine fault tolerance (PBFT) consensus mechanism. Which trade-off should they most carefully evaluate?

   • APBFT ensures immediate finality, but it requires a native cryptocurrency to incentivize validators
   • BPBFT provides strong privacy by encrypting all transaction data, but it sacrifices decentralization
   • CPBFT offers high throughput and finality, but its performance degrades as the number of nodes increases, limiting scalability
   • DPBFT is more energy-efficient than proof-of-work, but it is less secure against malicious nodes
   Reveal Solution Discussion Select an answer first
6. 35application · medium

   A DeFi developer wants to create a yield aggregator that automatically moves user funds between lending protocols to maximize interest. Which DLT feature is most critical for this application to work efficiently?

   • AThe immutability of the aggregator's smart contract
   • BThe use of a centralized order book to match lenders and borrowers
   • CThe ability to mine new tokens to reward users
   • DThe ability to execute multiple contract calls in a single transaction
   Reveal Solution Discussion Select an answer first