What is CeFi (Centralized Finance) in Blockchain ?

CeFi in Blockchain refers to the participation of intermediaries to facilitate crypto-asset exchange transactions between the respective holders. They act on behalf of the owners of the cryptocurrencies or the tokens by facilitating a number of different types of transactions.

However, this induces a risk of malpractices by these intermediaries or hacks of holders systems leading to loss, thus acting like a Single Point of Failure. An alternative to this is the DeFi or Decentralized Finance that is facilitated by Decentralized exchanges, that eliminate the need of intermediaries, hence corresponding risks associated with them are also eliminated.

However, Decentralized exchanges cannot offer a number of benefits offered by the Centralized exchanges like fiat conversion and Cross chain exchanges.



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