Structure and Components of the DeFi Ecosystem BFC Practice Questions (Page 3)

Questions 11–15

1. 11foundation · easy

   How do smart contracts enable DeFi protocols to automate financial transactions?

   • ABy requiring a central authority to approve each transaction
   • BBy executing predefined actions automatically when conditions are met, without intermediaries
   • CBy using artificial intelligence to predict market movements
   • DBy storing transaction data off-chain in a centralized database
   Reveal Solution Discussion Select an answer first
2. 12expert · hard

   A DeFi aggregator is planning to integrate multiple lending protocols to offer users the best interest rates. The team is concerned about the risk of a vulnerability in one protocol affecting the aggregator. Which approach best mitigates this risk while maintaining composability?

   • ARely on the lending protocols' own audits and assume they are secure.
   • BUse a modular architecture where each integration is isolated in a separate smart contract, and include circuit breakers that can pause integrations.
   • CIntegrate only one lending protocol to minimize risk.
   • DUse a single smart contract that directly calls all protocols to reduce complexity.
   Reveal Solution Discussion Select an answer first
4. 13expert · hard

   A DeFi protocol's tokenomics model includes a governance token that also provides fee discounts and staking rewards. The team wants to increase user participation in governance without compromising the token's economic value. Which mechanism is most effective?

   • AIntroduce a delegation system that allows token holders to delegate their voting power to community representatives
   • BCreate a separate governance token that has no economic value
   • CRequire token holders to lock their tokens for a year to be eligible to vote
   • DIncrease the token supply to make governance more accessible
   Reveal Solution Discussion Select an answer first
5. 14application · medium

   A stablecoin issuer wants to maintain a 1:1 peg to the US dollar. They are considering using a reserve of fiat currency held in a bank account. Which type of stablecoin is this, and what is a key risk?

   • AA fiat-collateralized stablecoin; the key risk is the custodian's solvency and regulatory compliance
   • BA crypto-collateralized stablecoin; the key risk is collateral volatility
   • CAn algorithmic stablecoin; the key risk is a death spiral
   • DA commodity-collateralized stablecoin; the key risk is commodity price fluctuation
   Reveal Solution Discussion Select an answer first
6. 15application · medium

   A fintech startup wants to offer users a way to trade tokenized assets directly from their wallets without creating accounts or depositing funds with the platform. The team plans to use an automated market maker (AMM) model. Which core DeFi component should they integrate, and what is the key smart contract feature that enables this?

   • AA centralized exchange with an API that allows wallet-based trading through custodial accounts
   • BAn oracle service that feeds off-chain prices into smart contracts to enable peer-to-peer trades
   • CA decentralized exchange (DEX) with liquidity pools managed by smart contracts that execute trades atomically
   • DA lending protocol that uses smart contracts to match borrowers and lenders for token swaps
   Reveal Solution Discussion Select an answer first