Quiz 6 - Lending & Borrowing

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DeFi MOOC

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Question 1 - Which of the following statements is false? *

1 point

We cannot yet collateralise real-world assets as on-chain security.

On-chain lending is still unable to capture real-world events such as salary.

There are currently no regulations in place for on-chain lending.

On-chain leveraged lending is not possible.

Question 2 - Which of the following statements is false? *

1 point

If a borrower obtains an over-collateralised loan, he or she is usually free to use the asset lent. The borrower, for example, could simply take all of the borrowed funds, spend it, and never close the lending position on-chain.

A leverage of 1.5x indicates that the position is under-collateralized.

If the health factor falls below one, a borrowing position can be liquidated.

The close factor is the maximum percentage of the debt that can be repaid in a single fixed spread liquidation.

Question 3: Which of the following is NOT a reason for borrowers not to maximise their leverage for under-collateralised borrowing? *

1 point

The revenue decreases as the leverage increases

Borrowing interest increases as the leverage increases

Liquidation risks increases as the leverage increases

Borrowers take additional risks when using the funds (e.g., Impermanent loss)

Question 4 - Which of the following liquidation strategies best describes the optimal fixed spread liquidation strategy? *

1 point

The liquidator first performs an oracle price update, and then atomically performs the liquidation.

The liquidator liquidates the position up to the close factor. (when the close factor drops below 1, the position becomes available for liquidation)

Performs two liquidations. The first one keeps the close factor below 1, such that the second liquidation can also successfully execute

Question 5 - We define a borrowing position as a bad debt if it is financially rationale for neither the borrowers nor the lending platform to close the position. Which of the following is not a cause for bad debt? *

1 point

If the collateral value falls below the value of the debt.

If the value of excess asset used for over-liquidation cannot cover the liquidation transaction fee

If the debt has not been repaid for a long time

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