Get All Weeks Decentralized Finance (DeFi) Deep Dive Coursera Quiz Answers
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Decentralized Finance (DeFi) Deep Dive Week 01 Quiz Answers
Module 1 Graded Quiz Answers
Q1. DAI holds its value as a stablecoin because it is fully collateralized with physical U.S. dollars and the holdings are regularly audited.
Q2. A user could use MakerDAO to make a leveraged bet on ETH by depositing ETH, minting DAI (which needs to be paid back) and using the DAI to purchase more ETH.
ViewQ3. Borrowing in MakerDAO is an example of a collateralized debt obligation. The collateral is set to exactly match the value of the loan.
ViewQ4. If the price of ETH drops, leading to an undercollateralization (meaning below the required collateralization), then the smart contract automatically closes out the loan (sells the collateral to pay back the loan).
ViewQ5. In the case of a major drop in the value of ETH, MakerDAO has an additional mechanism to collect what is owed by the borrowers: the same type of collection agency used in traditional finance.
ViewQ6. MKR governance tokens control the MakerDAO. They vote on proposals such as new types of collateral and changing parameters like collateralization ratios.
ViewQ7. A drawback of DAI is that the supply is limited by the demand for ETH- and ERC-20-collateralized debt.
ViewQ8. Given that DAI has so many levels of risk management, DAI’s pegged value will always be protected even in the scenario of a massive collapse in the collateral value.
ViewQ9. In Compound, the collateralization ratio is calculated as 100 divided by the weighted sum of the asset collateralization factors.
ViewQ10. In Compound, the borrowing rate is usually an increasing function where the y-intercept is the base rate and the slope represents the change in rates. These parameters are identical for every ERC-20 token.
ViewQ11. In Compound, the borrowing rate is always less than the supply rate.
ViewQ12. A reserve factor is set aside from the borrower’s revenue to cover a situation where a borrower might default.
ViewQ13. A compound can be used to bet that the prices of ETH will decrease by doing the following: Step 1: deposit stable coin; Step 2: borrow ETH; and Step 3: sell ETH for stablecoin.
ViewQ14. Compounds c-tokens represent the users share in the liquidity pool.
ViewQ15. Compound became fully decentralized when the COMP governance tokens were given to users of the platform and additional COMP continues to be distributed to users as an incentive to use the platform.
ViewQ16. One disadvantage of Compound is that the c-tokens are specialized to Compound’s protocol and can only be used in that protocol.
ViewQ17. Flash loans can be used to refinance borrowing to take advantage of the lowest interest rate that is offered.
ViewQ18. One disadvantage of flash loans is that in the transaction (with many steps) is the following: if there is a problem with one of the steps, you could lose your capital.
ViewQ19. One advantage of Aave is that they offer a loan with a guaranteed fixed rate.
ViewQ20. Credit delegation in Aave brings trustless uncollateralized or undercollateralized lending to DeFi.
ViewDecentralized Finance (DeFi) Deep Dive Week 02 Quiz Answers
Module 2 Graded Quiz Answers
Q1. In a constant product automated market maker, the invariant is the product of the number of tokens in the pool for token A and token B.
ViewQ2. To purchase token A from the AMM, a user needs to deposit token B and then withdraw token A.
ViewQ3. One drawback of the AMMs are the limited trading hours (currently 9:30am to 4:00pm Eastern Time).
ViewQ4. Smaller invariants mean more liquidity in the pool.
ViewQ5. The higher the correlation of the pair of assets in a liquidity pool – the higher the impermanent loss.
ViewQ6. Given there is almost always an impermanent loss, AMMs will eventually disappear because no one will supply liquidity when you know you will lose money.
ViewQ7. In contrast to other DeFi applications, AMMs are immune to users trying to front-run trades.
ViewQ8. A flash swap is the same as a flash loan.
View
Q9. Both flash swaps and flash loans require full collateralization.
ViewQ10. The key innovation in Uniswap v3 is that liquidity providers can allocate funds to a custom range of prices.
Q11. Balancer generalizes the idea of Uniswap so that more than two tokens can be supported in a liquidity pool and the amounts of value need not be the same for each token.
ViewQ12. Hypothecation simply means pledging collateral.
ViewQ13. Rehypothecation refers to the situation where the collateral is returned to the borrower when the loan is paid off.
ViewQ14. Total locked value refers to funds that are trapped forever in liquidity pools.
ViewQ15. Rehypothecation leads to an understatement of total locked value.
ViewDecentralized Finance (DeFi) Deep Dive Week 03 Quiz Answers
Module 3 Graded Quiz Answers
Q1. The Yield Protocol provides a way to do fixed rate investing and borrowing.
ViewQ2. During the lecture we talked about the mechanics of a fixed rate 8.7% loan. The following steps approximately describe the loan (assume 1 ETH = 200 DAI). 1. Supply 1 ETH to Protocol as collateral and mint 100 yDAI; 2) Sell 100 yDAI to the buyer and receive 92 DAI; 3) In one year, buyer deposits 100 yDAI and receives 100 DAI. The rate of return for the buyer is 100/92 – 1 = 8.7%.
ViewQ3. In the Protocol and continuing the lecture example, if the price of ETH falls below the maintenance point (but the collateral is still worth more than the loan), the contract will be closed out and the supplier of capital will fail to get their 8.7% return.
ViewQ4. dYdX is a decentralized derivatives exchange where all orders (bids and asks) are on-chain which is enormously expensive because of gas fees.
ViewQ5. It is possible to utilize dYdX’s free flash loans to do cross-DEX arbitrage.
ViewQ6. Perpetual futures are identical to CeFi futures contracts with long-dated expirations, say 10 years.
ViewQ7. The funding rate in a perpetual futures contract is the interest that you collect on the collateral deposit that you make.
ViewQ8. Futures contracts are equivalent to options where the long futures is analogous to a call option (you make money when the price goes up) and the short futures is analogous to a put option (you make money when the price goes down).
ViewQ9. Synths are tokens whose prices are pegged to an underlying price feed and are backed by collateral. The s-tokens represent long positions and the i-tokens represent the inverse (like a short position).
ViewQ10. In any Synthetix position, the trader is effectively “long” her personal portfolio against the entire pool’s portfolio.
ViewDecentralized Finance (DeFi) Deep Dive Week 04 Quiz Answers
Module 4 Graded Quiz Answers
Q1. Set Protocol combines tokens from different blockchains (e.g., ETH and BTC) into a composite token.
ViewQ2. In a static set, tokens are a fixed bundled set of tokens, e.g., 50% USDC and 50% DAI would be a static stablecoin set.
ViewQ3. In dynamic sets, a trading strategy can be hard coded into the set, such as a moving average rule.
ViewQ4. An advantage of active Sets compared to ETFs is that there are no fees with Sets.
ViewQ5. It is possible to set up a discretionary Set where the creator has discretion over the sizes of positions thus enabling social trading.
ViewQ6. Active sets are likely securities.
ViewQ7. Wrapped bitcoin is a method to collateralize (off chain) with bitcoin and mint an ERC-20 token to deploy in DeFi.
ViewQ8. When Ethereum moves to Proof of Stake consensus, this will cause a problem for wrapped bitcoin because bitcoin will still be using Proof of Work consensus.
ViewQ9. The DAO that controls the multisignature wallet for wBTC uses a governance token so it is fully decentralized.
ViewQ10. Wrapped ETH is an example of a centralized cryptocurrency, like USDC.
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Decentralized Finance (DeFi) Infrastructure
Decentralized Finance (DeFi) Primitives
Decentralized Finance (DeFi) Deep Dive
Decentralized Finance (DeFi) Opportunities and Risks
