Test your knowledge by answering below DIVA related questions
Q1: Which protocol is DIVA App using under the hood to facilitate the trading of position tokens? What are the benefits of this protocol compared to other solutions?
Q2: How many parameters drive the shape of the payoff curves and what’s their name and meaning?
Q3: How many different types of payoff profiles does DIVA Protocol allow to create? Use the DIVA App to create examples for each type and respond with a screenshot and name of the corresponding payoff profiles.
Q4: What is the maximum payout per position token? How is that achieved? What’s the implication for the price of position tokens?
Q5: What’s the difference between creating a contingent pool and adding liquidity?
Q6: What happens under the hood when a user creates a contingent pool? Send an etherscan link to a create contingent pool transaction and explain in your own words what it does.
Q7: What happens under the hood when a user adds liquidity to an existing pool? Send an etherscan link to an Add Liquidity transaction and explain in your own words the underlying asset flows.
Q8: You see a Buy Limit order ("Bid") of dUSD 1.5 in the orderbook for one of the assets in the DIVA App. Explain how you can make a risk-free profit.
Q9: Which of the following oracle protocols will DIVA Protocol be able to support and why?
- Tellor Protocol
- UMA Protocol
- DIA Protocol
- Band Protocol
Q10: What was the name of the Protocol that inspired the design of DIVA Protocol?
Q11: The LONG position tokens of pools A and B (see screenshots) are traded on the market. Which one is more expensive and why? What can you say about the value of the SHORT position tokens of the two pools?
Q12: How would one need to adjust the payoff parameters of Pool A in Q11 such that the provided answer to the cited question is no longer necessarily true? Explain why.
Q13a: What are the two ingredients that make up a derivative?
Q13b: Which of the following statements are TRUE:
- 1.When holding a derivative you are not holding the underlying directly
- 2.When holding a derivative you are holding the underlying directly
- 3.Derivatives can be used to profit from both up- and downside of the underlying
- 4.Derivatives can be used to profit from the upside of the underlying only
- 5.Derivatives can be used to profit from the downside of the underlying only
Q14: What are two feasible ways to exit a position before expiration. Having a position means owning a long or short position token.
Q15: In which case would you choose to remove liquidity rather than sell?
Q16: Why is the following statement not true: A position token holder always has to wait until the end of the submission period (i.e. at least 24h after expiration) before they can redeem their position tokens.
Q17: What is another scenario where position token holders do not need to wait 24h until they can redeem?
Q18: Assume two LONG position tokens A and B with exactly the same configuration except for the expiration time. Token A expires earlier than token B. The current intrinsic value of both is zero, i.e. positions are “out of the money” (underlying value < floor). Which one is more expensive and why?
Q19: Assume two LONG position tokens A and B with exactly the same configuration except for the expiration time. Token A expires earlier than token B. The current intrinsic value of both is 1, i.e. underlying value >= cap. Which one is more expensive and why?
Q20: What happens if the data provider doesn’t submit a value during the submission period following expiration?
Q21: How much time has the fallback data provider to report the final value?
Q22: What is the maximum and minimum time fallback data providers could be granted by the protocol?
Q23: Is a fallback data provider’s submission challengeable? What’s the implication of the answer for the status of the final reference value?
Q24: What does that mean for position token holders if the status is confirmed?
Q25: What happens if both the data provider and the fallback provider fail to submit a value?
Q26: In which cases should users expect a fallback provider to step in and submit a value?
Q27: Who can challenge a submitted value?
Q28: Bob creates a pool with 100 USDC as collateral. How much fee is Bob paying to DIVA protocol at the time of pool creation?
Q29: During which operations do users pay a fee and how much?
Q30: Bob bought 100 LONG position tokens that expired worthless (payout 0 USDC). Alice bought 100 of the corresponding SHORT position tokens and received the maximum payout. How much fees are Bob and Alice paying each in total in USDC when they redeem their position tokens?
Q31: The final value defaults to inflection. Who receives the fee payments when users redeem their position tokens and how much is that in %?
Q32: How much fee do users pay when adding liquidity to an existing pool?
Q33: Bob has created a new contingent pool, but he doesn’t manage to find a buyer for his position tokens. He sends them back to DIVA protocol to return his collateral. How many times does Bob pay fees including blockchain transaction fees in the worst case? Name the actions for which fees are paid.
Q34: What’s the gradient in the chart? What is the gradient for the corresponding SHORT position?
Q35: Assume you have a LONG position token where floor=inflection=cap=1 and gradient=1. What’s the name of the resulting payoff shape and what’s the payout per SHORT position token if the final outcome ends up at 1?
Q36: What does the maximum capacity of a pool represent and where can you set it inside the DIVA App?
Q37: Bob has created a pool where he deposited 100 USDC and set the maximum capacity to 120 USDC. Bob removes liquidity for 30 USDC after a while. How much can Alice add to the pool as liquidity?
Q38: When can it make sense to set a maximum pool capacity?
Q39: What’s the payout gross of fees of the corresponding SHORT position token if ETH/USD ends up at 1000?
Q40: Referring to the screenshot in Q39, what’s the payout net of fees of the LONG position token if ETH/USD ends up at 1100?
Q41: Referring to the screenshot in Q39, what’s the combined payout net of fees of the LONG and SHORT position token if ETH/USD ends up at 10'000?
Q42: Referring to the screenshot in Q39, choose an ETH/USD value between 800 (floor) and 1200 (cap) of your choice and give me the payout for the LONG position token gross of fees and the payout for the corresponding SHORT position token net of fees.
Q43: What’s the definition of intrinsic value? Use the screenshot in Q39 to provide an example in your explanation.
Q44: ETH/USD stands at 1'100 and the LONG position token trades at 0.7. What is the LONG position token’s intrinsic value?
Q45: What’s the extrinsic value here? How would you define extrinsic value if you were to include it in our docs?
Q46: Can intrinsic value for a position token be negative? Explain your answer.
Q47: Can the extrinsic value of a position token be negative? Explain why/why using a concrete example.
Q48: What's another term for price in the context of derivatives?
Q49: When is extrinsic value equal to zero?
Q50: This question consists of three parts:
- 1.Choose an ETH/USD value of your choice and provide the intrinsic value for the LONG and SHORT position token (see screenshot); ignore any fees for that exercise.
- 2.Provide an example where the extrinsic value is positive. Use concrete values for ETH/USD and premium in your example.
- 3.Provide an example where the extrinsic value is negative. Use concrete values for ETH/USD and premium in your example.
- 1.Assumed ETH/USD value: [...] -> Intrinsic value LONG: dUSD [...] -> Intrinsic value SHORT: dUSD [...]
- 2.Example extrinsic value > 0: ETH/USD: [...] -> Intrinsic Value: [...], Premium: dUSD [...] -> Extrinsic value: dUSD [...]
- 3.Example extrinsic value < 0: ETH/USD: [...] -> Intrinsic Value: [...], Premium: dUSD [...] -> Extrinsic value: dUSD [...]