What is DeFi? What is the difference between decentralized finance DeFi and CeFi

There are significant differences between decentralized finance (DeFi) and centralized finance (CeFi): DeFi is managed by a distributed network with no central authority, while CeFi is built on centralized infrastructure and controlled by specific entities . DeFi emphasizes non-custodial asset storage, while CeFi custodial user assets. DeFi is generally more transparent and widely accessible, but transactions can be slower and have higher fees, while CeFi offers faster speeds and lower fees at the expense of decentralization and accessibility.

Key points:

Understand the relationship between decentralized finance (DeFi) and centralized finance (CeFi) Key difference.

The difference between DeFi and CeFi:

1. Decentralization and centralization:

• DeFi: Managed by a distributed network (often based on blockchain) without the need for a central authority.
• CeFi: Built on centralized infrastructure and controlled by specific entities (such as banks or cryptocurrency exchanges).

2. Managed and unmanaged:

• DeFi: Users retain full control of their assets, typically stored in a personal wallet.
• CeFi: Assets are stored on exchanges or custodians, and users grant control to third parties.

3. Accessibility and Transparency:

• DeFi: Transactions and activities open to anyone through an open and decentralized platform Recorded on the public blockchain.
• CeFi: Account creation requirements may be set, and transaction and activity records are only visible to centralized entities and regulators.

4. Fees and Speed:

• DeFi: Blockchain-based transactions are generally slower and more expensive than CeFi transactions.
• CeFi: Typically offers faster transaction speeds and lower fees, but there may be middleman fees.

5. Security and supervision:

• DeFi: Smart contracts and blockchain technology provide inherent security, but are also susceptible to hacking and other vulnerabilities.
• CeFi: Typically follows regulatory norms and generally offers a higher level of security than DeFi, but its centralized nature also carries risks.

OKX:

OKX is one of the world’s leading cryptocurrency exchanges, Leading the way in DeFi. OKX offers a variety of DeFi products and services, including:

• DeFi Exchange: A platform for trading DeFi tokens.
• Lending Services: Allows users to lend or borrow cryptocurrencies.
• Mining Pool: A platform to participate in blockchain mining and obtain rewards.
• DeFi Tools: Includes tools like price tracker, yield calculator, and governance voting.

FAQ:

What is decentralized finance (DeFi)?

DeFi is a financial system built on a distributed network that gives individuals control over their funds without the need for intermediaries.

What is the difference between DeFi and CeFi?

DeFi is decentralized and has no central authority, while CeFi is centralized and controlled by specific entities. DeFi provides non-custodial asset storage, while CeFi custodial user assets. DeFi is generally more transparent and widely available, but transactions can be slower and more expensive, while CeFi offers faster speeds and lower fees at the expense of decentralization and accessibility.

What are the advantages of DeFi?

• Decentralized, reducing dependence on middlemen.
• Give individuals control over their funds.
• Greater transparency, increasing trust and accountability.

What are the risks of DeFi?

• Potential risks of hacking attacks and vulnerabilities.
• Transactions can be slow and expensive.
• Lack of supervision and protection measures.

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