DeFi vs. CeFi #DefiCeFi
Decentralized finance is a core value in crypto, but DeFi platforms can have a steep learning curve. Centralized finance platforms can provide an easier and more familiar point of entry for people.
What is Centralized Finance?
#CeFi is an approach within the cryptocurrency market to handle the purchase, sale and trading of cryptocurrency tokens through a central exchange.
What are the advantages of CeFi?
Customer service:
Customer service is part of what many CeFi cryptocurrency exchanges provide to support users.
Fiat conversion:
CeFi exchanges can enable the conversion of fiat currency to cryptocurrency.
Cross-chain support:
CeFi provides mechanisms for cross-chain exchange across multiple cryptocurrency tokens.
Margin trading:
CeFi provides the possibility of interest income on assets.
What are the Disadvantages of CeFi?
Custody: Funds are held outside of user custody.
Regulatory Risk: There is a potential risk from regulatory authority compliance.
Examples of CeFi:
-Binance #Binance $BNB
-Coinbase
-Gemini
-Kraken
What is Decentralized Finance?
With DeFi, cryptocurrency transactions -- including buying, selling, loans and payments -- can be enabled in a peer-to-peer approach.
Advantages of #DeFi
Custody: Custody over funds is controlled by the user.
Permissionless: There is no third-party identity verification needed.
Anonymous: DeFi can enable anonymous use of service and financial transactions.
DApps: DeFi supports new types of applications for financing, including dApps.
Fees: DeFi offers lower fees than CeFi-based transactions.
Disadvantages of DeFi:
Complexity: DeFi model relies on sophisticated algorithms and smart contracts.
Security: DeFi systems have become a high-priority target for attackers.
Volatility: Volatility can be an issue as there is no central authority.
Customer service: There is no customer service since the technology is largely driven by algorithms, not humans.
Examples of DeFi
- $1INCH Network
-MakerDAO
-PancakeSwap $CAKE
-Stargate Finance
-Uniswap #Uniswap
