Exercise 1: Money Markets Knowledge Assessment

⏰ Time Investment: 30-45 minutes 🎯 Goal: Test your understanding of money market fundamentals and identify knowledge gaps

📚 Required Reading Integration 📖 Primary: Lesson 1: Understanding DeFi Money Markets Fundamentals 📖 Supporting: Lesson 2: The Mathematics of Lending and Borrowing

🔍 Phase 1: Knowledge Check (10 minutes)

Understanding Check

Answer these questions to assess your comprehension:

1. What is the fundamental difference between monolithic and modular money market architectures?

• Your answer: _________________________________

2. How does over-collateralization protect lenders?

• Your answer: _________________________________

3. What are the two paths to Aave and when would you use each?

• Your answer: _________________________________

4. Why can't you be liquidated if you're only supplying assets (not borrowing)?

• Your answer: _________________________________

5. What is the difference between LTV (Loan-to-Value) and Liquidation Threshold?

• Your answer: _________________________________

📊 Phase 2: Architecture Comparison (15 minutes)

Monolithic vs Modular Analysis

Scenario: You're evaluating two protocols for a $10,000 USDC deposit.

Protocol A (Monolithic):

• Single shared liquidity pool

• Governance manages all parameters

• All assets in same pool

• Insurance fund covers all markets

Protocol B (Modular):

• Isolated markets per asset pair

• Permissionless market creation

• Risk isolated to each market

• No shared insurance fund

Exercise 1: Compare the risks and benefits of each approach:

Factor	Monolithic (Protocol A)	Modular (Protocol B)
Risk Isolation
Capital Efficiency
Ease of Use
Flexibility

Exercise 2: Which would you choose for your first position and why?

• Your choice: _________________________________

• Reasoning: _________________________________

Architecture Comparison Template

💡 Phase 3: Real-World Application (10 minutes)

Protocol Selection Exercise

You want to earn yield on $5,000 USDC. Analyze these options:

Option 1: Aave App

• APY: 6.5%

• Insurance: $1M coverage

• Interface: Mobile app, simple

• Network: Ethereum (via app)

Option 2: Aave V3 on Arbitrum

• APY: 5%

• Insurance: Safety Module (shared)

• Interface: Web dApp

• Network: Arbitrum (low gas)

Option 3: Morpho Vault

• APY: 5.5%

• Insurance: None (isolated markets)

• Interface: Web dApp

• Network: Ethereum

Exercise 3: Compare and rank these options for a beginner:

Ranking (1 = Best, 3 = Least suitable):

• Option 1: ___

• Option 2: ___

• Option 3: ___

Reasoning for #1 choice: _________________________________

📝 Phase 4: Key Concepts Review (10 minutes)

Fill in the Blanks

1. The _______________ model pools all assets together, while the _______________ model isolates markets.

2. When you supply assets to a protocol, you receive _______________ tokens that represent your deposit.

3. The _______________ is the percentage of the pool currently lent out and drives interest rates.

4. _______________ are bridges that feed off-chain price data to on-chain smart contracts.

5. The Aave App uses a "_____________" strategy: Fintech in the front, DeFi in the back.

✅ Self-Assessment

Rate your understanding (1 = Need more review, 5 = Fully understand):

• Money market fundamentals: __/5

• Monolithic vs modular architectures: __/5

• Basic operational concepts: __/5

• Protocol selection criteria: __/5

Areas needing more review: _________________________________

🎯 Next Steps

If you scored < 4 on any topic:

• Review Lesson 1 material on that topic

• Re-read the Beginner's Corner sections

• Look up additional resources on unclear concepts

If all topics ≥ 4:

• Proceed to Exercise 2 (Calculation Practice)

• Move forward with confidence!

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