Decentralized Finance (DeFi) Deep Dive Coursera Quiz Answers

Get All Weeks Decentralized Finance (DeFi) Deep Dive Coursera Quiz Answers

DeFi and the Future of Finance is a set of four courses that focus on decentralized finance. The third course is called DeFi Deep Dive. It is essential that you do the first two courses I. DeFi Infrastructure and II. DeFi Primitives before doing this course. It is the longest of the four courses and focuses on some of the leading protocols in the DeFi space.

We will look at Credit and Lending (and feature MakerDAO, Compound, and Aave), Decentralized Exchange with an analysis of how protocols like Uniswap and Balancer works, Derivatives (featuring Yield Protocol, dYdX, and Synthetix), and Tokenization with an analysis of Set Protocol as well as wrapped bitcoin. For many of these leading protocols, we include detailed examples of how the mechanics work. For example, we show how to use a did flash swap to execute an arbitrage transaction (take advantage of different prices on different exchanges for the same asset).

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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.

  • True
  • False

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.

  • True
  • False

Q3. Borrowing in MakerDAO is an example of a collateralized debt obligation. The collateral is set to exactly match the value of the loan.

  • True
  • False

Q4. 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).

  • True
  • False

Q5. 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.

  • True
  • False

Q6. MKR governance tokens control the MakerDAO. They vote on proposals such as new types of collateral and changing parameters like collateralization ratios.

  • True
  • False

Q7. A drawback of DAI is that the supply is limited by the demand for ETH- and ERC-20- collateralized debt.

  • True
  • False

Q8. 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.

  • True
  • False

Q9. In Compound, the collateralization ratio is calculated as 100 divided by the weighted sum of the asset collateralization factors.

  • True
  • False

Q10. In Compound, the borrow 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.

  • True
  • False

Q11. In Compound, the borrow rate is always less than the supply rate.

  • True
  • False

Q12. A reserve factor is set aside from the borrower revenue to cover a situation where a borrower might default.

  • True
  • False

Q13. 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.

  • True
  • False

Q14. Compounds c-tokens represent the users share in the liquidity pool.

  • True
  • False

Q15. Compound became fully decentralized when the COMP governance tokens were given to users of the platform and additional COMP continue to be distributed to users as an incentive to use the platform.

  • True
  • False

Q16. One disadvantage of Compound is that the c-tokens are specialized to Compound’s protocol and can only be used in that protocol.

  • True
  • False

Q17. Flash loans can be used to refinance borrowing to take advantage of the lowest interest rate that is offered.

  • True
  • False

Q18. 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.

  • True
  • False

Q19. One advantage of Aave is that they offer a loan with a guaranteed fixed rate.

  • True
  • False

Q20. Credit delegation in Aave brings trustless uncollateralized or undercollateralized lending to DeFi.

  • True
  • False

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.

  • True
  • False

Q2. To purchase token A from the AMM, a user needs to deposit token B and then withdraw token A.

  • True
  • False

Q3. One drawback of the AMMs are the limited trading hours (currently 9:30am to 4:00pm Eastern Time). 

  • True
  • False

Q4. Smaller invariants mean more liquidity in the pool.

  • True
  • False

Q5. The higher the correlation of the pair of assets in a liquidity pool – the higher the impermanent loss.

  • True
  • False

Q6. 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. 

  • True
  • False

Q7. In contrast to other DeFi applications, AMMs are immune to users trying to front-run trades. 

  • True
  • False

 Q8. A flash swap is the same as a flash loan. 

  • True
  • False

Q9. Both flash swaps and flash loans require full collateralization.

  • True
  • False

Q10. The key innovation in Uniswap v3 is that liquidity providers can allocate funds to a custom range of prices.

  • True
  • False

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.

  • True
  • False

Q12. Hypothecation simply means pledging collateral.

  • True
  • False

Q13. Rehypothecation refers to the situation where the collateral is returned to the borrower when the loan is paid off.

  • True
  • False

Q14. Total locked value refers to funds that are trapped forever in liquidity pools.

  • True
  • False

Q15. Rehypothecation leads to an understatement of total locked value.

  • True
  • False

Week 03 Quiz Answers

Module 3 Graded Quiz Answers

Q1. The Yield Protocol provides a way to do fixed rate investing and borrowing.

  • True
  • False

Q2. 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%.

  • True
  • False

Q3. 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.

  • True
  • False

Q4. dYdX is a decentralized derivatives exchange where all orders (bids and asks) are on-chain which is enormously expensive because of gas fees.

  • True
  • False

Q5. It is possible to utilize dYdX’s free flash loans to do cross-DEX arbitrage.

  • True
  • False

Q6. Perpetual futures are identical to CeFi futures contracts with long-dated expirations, say 10 years.

  • True
  • False

Q7. The funding rate in a perpetual futures contract is the interest that you collect on the collateral deposit that you make.

  • True
  • False

Q8. 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).

  • True
  • False

Q9. 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).

  • True
  • False

Q10. In any Synthetix position, the trader is effectively “long” her personal portfolio against the entire pool’s portfolio.

  • True
  • False

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.

  • True
  • False

Q2. 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. 

  • True
  • False

Q3. In dynamic sets, a trading strategy can be hard coded into the set, such as a moving average rule.

  • True
  • False

Q4. An advantage of active Sets compared to ETFs is that there are no fees with Sets.

  • True
  • False

Q5. It is possible to set up a discretionary Set where the creator has discretion over the sizes of positions thus enabling social trading.

  • True
  • False

Q6. Active sets are likely securities.

  • True
  • False

Q7. Wrapped bitcoin is a method to collateralize (off chain) with bitcoin and mint an ERC-20 token to deploy in DeFi.

  • True
  • False

Q8. 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.

  • True
  • False

Q9. The DAO that controls the multisignature wallet for wBTC uses a governance token so it is fully decentralized.

  • True
  • False

Q10. Wrapped ETH is an example of a centralized cryptocurrency, like USDC.

  • True
  • False
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Get All Course Quiz Answers of Decentralized Finance (DeFi): The Future of Finance Specialization

Decentralized Finance (DeFi) Infrastructure

Decentralized Finance (DeFi) Primitives

Decentralized Finance (DeFi) Deep Dive

Decentralized Finance (DeFi) Opportunities and Risks

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