Structure and Components of the DeFi Ecosystem BFC Practice Questions (Page 7)

Questions 31–35

1. 31foundation · easy

   Which of the following is a scalability challenge commonly associated with DeFi?

   • AHigh transaction throughput and low latency on public blockchains
   • BNetwork congestion leading to high transaction fees and slow confirmation times
   • CInability to integrate with traditional banking systems
   • DLimited number of users due to regulatory restrictions
   Reveal Solution Discussion Select an answer first
2. 32expert · hard

   A DeFi protocol's governance token has a high market cap, but a small group of large holders controls a majority of the voting power. The community is concerned about governance attacks. They want to increase decentralization without reducing the token's utility. Which measure is most effective?

   • AImplement a quadratic voting system where the cost of additional votes increases exponentially
   • BIncrease the total token supply to dilute the large holders' voting power
   • CRestrict voting to only those who have held the token for at least one year
   • DAllow token holders to delegate their voting power to a trusted third party
   Reveal Solution Discussion Select an answer first
4. 33application · medium

   A DeFi protocol is considering a governance proposal to change the collateral ratio for borrowing. The proposal is put to a vote by governance token holders. Which outcome best illustrates the role of governance tokens?

   • AThe protocol team decides the outcome, and token holders are informed afterward.
   • BToken holders vote, and if the proposal passes, the smart contract automatically updates the collateral ratio.
   • CThe proposal is automatically implemented without a vote.
   • DToken holders vote, but the change requires manual intervention by developers.
   Reveal Solution Discussion Select an answer first
5. 34expert · hard

   A DeFi startup is designing a protocol that will offer both a DEX and a lending platform. They want to use a single governance token to manage both. The team is debating whether to use a single smart contract for both functions or separate contracts that interact. Which approach best balances security and composability?

   • AUse separate smart contracts for the DEX and lending platform, with a shared governance mechanism.
   • BUse a single smart contract for both functions to reduce complexity and gas costs.
   • CUse a single contract but with a multi-sig wallet for governance.
   • DUse separate contracts with separate governance tokens to avoid conflicts.
   Reveal Solution Discussion Select an answer first
6. 35application · medium

   A DeFi lending protocol has suffered a flash loan attack that manipulated an oracle price, causing unfair liquidations. The team wants to prevent similar attacks in the future. Which approach is most effective?

   • AUse a decentralized oracle network that aggregates prices from multiple sources and includes a time-weighted average price (TWAP) mechanism.
   • BRemove the oracle and rely on a fixed price set by the protocol team.
   • CIncrease the liquidation penalty to discourage liquidators from participating.
   • DDisable flash loans on the protocol by rejecting transactions that borrow and repay in the same block.
   Reveal Solution Discussion Select an answer first