Deep Dive into XRPL DeFi Review Quiz

Why is trading on the XRPL a little different than on other blockchains?

The XRPL offers a built-in software wallet where users can safely store their currency.

The XRPL uses a Central Limit Order Book instead of an AMM.

The XRPL uses an AMM instead of a Central Limit Order Book.

The XRPL uses both a Central Limit Order Book and an AMM.

How does the XRPL order book differ from a typical AMM?

Trades on the Order Book happen during the hourly auction while an AMM executes trades instantly based on the current formula-based prices.

Trades on the Order Book happen when a marketplace merge (mpm) occurs while an AMM executes trades instantly based on the current formula-based prices.

Trades on the Order Book happen when a buyer's bid matches a seller's ask while an AMM executes trades instantly based on the current formula-based prices.

Trades on the Order Book happen when the buy/sell function cycles while an AMM executes trades instantly based on the current formula-based prices.

How does pathfinding benefit traders on a DEX?

It guarantees a fixed exchange rate for all transactions.

It allows for the direct trading of any two tokens without intermediaries.

It helps find more efficient trading routes, potentially leading to better exchange rates.

It speeds up the transaction confirmation process.

Which of these platforms don’t offer a built in order book?

Bitcoin

Ripplecoin

Ethereum

Dogecoin

All of the above

How do AMMs work?

AMMs work by holding currency in order books, then the ledger randomizes a fair exchange rate between the different currencies.

AMMs work by pooling currency in liquidity pools, then algorithmically picking a fair exchange rate between the different currencies.

AMMs work by pooling currency in liquidity pools, then the AMM leadership group picks a fair exchange rate between the different currencies.

AMMs work by pooling currency in liquidity pools, then the AMM community votes on a fair exchange rate between the different currencies.

What should you consider when choosing a consensus mechanism for an EVM sidechain?

Choose the mechanism with the highest fees, making the barrier to entry higher.

Choose a mechanism that offers limited scalability.

Educate yourself on the mechanisms' strengths and weaknesses in terms of security and other factors.

Choose a Proof of Stake (PoS) mechanism for maximum decentralization.

Where is the best place to store your private keys?

Written on a note.

Emailing them to yourself.

Remembering them.

In a hardware or software wallet.

What is one of the advantages that DeFi has over traditional finance systems?

DeFi has looser geographical restrictions.

DeFi requires complicated documentation.

DeFi is more transparent.

DeFi doesn’t require an account.

How does risk mitigation differ between traditional finance and DeFi?

DeFi relies on extensive documentation to mitigate risk.

DeFi offers the same level of protection as traditional banks.

In DeFi, Individuals hold the risk and must secure their own accounts.

Traditional finance systems do not involve any risk mitigation.

What is one of the advantages that DeFi has over traditional finance systems?

DeFi has looser geographical restrictions.

DeFi requires complicated documentation.

DeFi is more transparent.

DeFi doesn’t require an account.