Free CAIA Level I Digital Assets Practice Questions
Digital assets on CAIA Level I cover blockchain technology, smart contracts, decentralized finance (DeFi), Bitcoin and Ethereum fundamentals, tokenization of assets, and institutional portfolio allocation frameworks for digital assets.
120 questions43 easy55 medium22 hard2026 syllabus
Sample Questions
Question 1
Easy
A smart contract is best described as:
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Correct Answer: B
Solution
B is correct.
A smart contract is a program stored on a blockchain that automatically executes predefined actions when specified conditions are satisfied. It removes the need for intermediaries by encoding agreement terms directly into code.
Question 2
Medium
In decentralized finance (DeFi), composability refers to the ability to:
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Correct Answer: B
Solution
B is correct.
Composability in DeFi refers to the property that allows different protocols and smart contracts to interact seamlessly and be combined to build more complex financial applications. This is often described as "money Legos" because developers can stack protocols on top of each other.
Question 3
Hard
In a perpetual futures market, when the funding rate is positive over a settlement period, funding payments flow from:
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Correct Answer: B
Solution
B is correct. Perpetual futures use periodic funding payments to keep the contract price tethered to the spot index. When the perpetual trades at a premium to spot, the funding rate is positive and longs (who benefit from holding the premium-priced contract) pay shorts. When the perpetual trades at a discount, the funding rate is negative and shorts pay longs. The exchange typically does not take the other side of these payments.
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