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:
Risk Isolation
Capital Efficiency
Ease of Use
Flexibility
Exercise 2: Which would you choose for your first position and why?
Your choice: _________________________________
Reasoning: _________________________________
💡 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):
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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