Exercise 8: Lending Protocol Analysis

⏰ Time Investment: 30-45 minutes 🎯 Goal: Understand DeFi lending mechanics

📚 Required Reading Integration 📖 Primary: Lesson 8: DeFi Lending and Borrowing

🔍 Phase 1: Knowledge Check (15 minutes)

1. What is over-collateralization?

• Your answer: _________________________________

2. How does a health factor work?

• Your answer: _________________________________

3. What triggers a liquidation?

• Your answer: _________________________________

4. What are use cases for borrowing in DeFi?

• Your answer: _________________________________

5. How do interest rates work in DeFi?

• Your answer: _________________________________

📊 Phase 2: Health Factor Calculation (15 minutes)

Calculate health factors for different scenarios:

• $150 collateral, $100 debt, 80% LTV

• What happens if collateral drops 20%?

• How much can you borrow safely?

💡 Phase 3: Strategy Analysis (15 minutes)

Analyze borrowing strategies:

• Leverage strategies

• Tax efficiency use cases

• Risks and mitigations