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Lesson # 3
Yield Farming & Reward Optimization
Blockchain Basics
1. What is the key difference between staking and yield farming in DeFi?
A. Staking requires LP tokens while farming does not
B. Staking involves locking assets for network or protocol rewards, while farming involves providing liquidity for fees and incentives
C. Yield farming is safer than staking
D. Staking always earns more than farming
2. Why are vaults considered a passive DeFi strategy?
A. They require users to trade daily
B. Vaults never charge performance fees
C. Vaults auto-compound rewards and manage yield strategies on behalf of users
D. They only support stablecoins
3. What is a major risk of chasing high APYs based on token emissions?
A. You may earn fewer governance rights
B. The token's value may crash due to overinflation
C. There is no risk if the APY is high
D. All farms using emissions are backed by real revenue
4. How can DeFi platforms enhance stablecoin yields in liquidity pools?
A. By reducing gas fees on swaps
B. By pooling governance tokens to boost reward multipliers for liquidity providers
C. By converting LP tokens to NFTs
D. By issuing more stablecoins
5. What is a unique approach some DeFi protocols use to manage future yield?
A. Only supporting NFTs
B. Using fixed staking periods only
C. Splitting future yield into tradable parts like principal and interest components
D. Operating only on the Ethereum mainnet