DECENTRALIZED FINANCE VS CENTRALIZED FINANCE.
DeFi and CeFi represent two different approaches to the world of finance. DeFi, short for Decentralized Finance, refers to financial services and applications built on blockchain technology.
DeFi eliminates the need for traditional intermediaries such as banks and brokers, allowing users to engage in various financial activities, such as lending, borrowing, and trading, directly with each other using smart contracts.
CeFi, on the other hand, stands for Centralized Finance, which refers to traditional financial systems where financial services are provided by centralized institutions like banks, exchanges, and lending platforms. These institutions act as intermediaries and have control over users’ funds and transactions.
DeFi offers greater decentralization, potentially higher returns, and more financial inclusivity but comes with higher risks and complexities due to its relatively nascent stage.
CeFi, being more established, offers a more user-friendly experience but involves trusting third-party entities with your funds.
