Overview

For Centralized Finance (CeFi):

Control and Intermediaries: Centralized finance relies on centralized entities such as banks and regulatory bodies, emphasizing control through traditional intermediaries.

Regulation and Compliance: CeFi is subject to strict regulations, adhering to compliance measures that ensure transparency and consumer protection.

Trust in Third Parties: Trust is placed in centralized institutions to manage funds and protect client information.

Liquidity: CeFi institutions provide liquidity to markets through services such as loans and credit facilities.

Centralized Decision-Making: Key decisions in CeFi are made centrally within institutions like central banks, influencing financial policy and strategies.

For Decentralized Finance (DeFi):

Decentralization: DeFi relies on blockchain technology, distributing control across a network, eliminating the need for centralized authorities.

Open and Permissionless: DeFi platforms are open to anyone with internet access, providing a comprehensive and accessible financial system.

Transparency and Trustlessness: Blockchain technology ensures transparent transactions, and the trustless nature means parties don't need to trust each other or a central authority.

Programmable Finance: DeFi utilizes smart contracts to enhance automation, efficiency, and accessibility.

Risks and Security Concerns: DeFi faces challenges such as smart contract vulnerabilities and regulatory uncertainty, emphasizing the importance of security measures.

Decentralized Decision-Making: In DeFi, decisions are often made collectively by the community or through decentralized governance models.