Quiz: DeFi (Decentralized Finance) Fundamentals

Question 1: Which technology underpins DeFi applications?

A. Blockchain B. Centralized servers C. Cloud computing D. Mainframe computers

Question 2: What is a primary advantage of DeFi over traditional finance?

A. Higher transaction fees B. Limited accessibility C. Centralized control D. Elimination of intermediaries

Question 3: In DeFi, what executes financial transactions automatically?

A. Bank officials B. Smart contracts C. Manual processes D. Third-party auditors

Question 4: Which of the following is a common use case of DeFi?

A. Traditional stock trading B. Centralized banking C. Physical cash transactions D. Decentralized lending and borrowing

Question 5: What is an Automated Market Maker (AMM) in DeFi?

A. A regulatory body for DeFi B. A manual trading system C. A centralized exchange platform D. A system that provides liquidity using algorithms

Question 6: How does DeFi promote financial inclusion?

A. By limiting access to certain regions B. By allowing anyone with internet access to participate C. By requiring extensive documentation D. By partnering with traditional banks

Question 7: What role do liquidity providers play in DeFi platforms?

A. They regulate the platform B. They audit smart contracts C. They supply assets to facilitate trading D. They develop the platform's code

Question 8: Which DeFi protocol is known for decentralized lending and borrowing?

A. Aave B. Uniswap C. Bitcoin D. Ethereum

Question 9: What is "yield farming" in the context of DeFi?

A. Cultivating crops using blockchain B. Mining new cryptocurrencies C. Earning rewards by providing liquidity to DeFi protocols D. Staking tokens for network security

Question 10: How are interest rates typically determined in DeFi lending platforms?

A. By a central authority B. Through supply and demand dynamics C. Fixed rates set by developers D. Based on users' credit scores

Question 11: What does "Total Value Locked" (TVL) indicate in DeFi?

A. The total number of users on a platform B. The total number of transactions processed C. The total revenue generated by a platform D. The total amount of assets deposited in DeFi protocols