What are the differences between DeFi and CeFi in Crypto?

2 min readMar 16


The constant disconnect between Centralized Finance and Decentralized Finance makes it hard to know which option is better, especially if you have very little experience with either.

What are the differences between DeFi and CeFi in Crypto?

Whether you are looking for cryptocurrency-related financial services or something far more specific, understanding the DeFi vs CeFi argument is important to choosing the right option.

Centralized and decentralized exchanges are both valid ways of trading crypto assets, but they are different enough to make the distinction important.

What are Centralized Finance (CeFi) Services?

Centralized financial services are the traditional financial services for most purposes. These rely on central exchanges that are part of the global financial system, with most CeFi service providers being part of the larger financial industry or centralized companies.

CeFi services come from centralized entities that have complete control over the platform. This single centralized entity — whether that is a company or a government financial institution — is the authority of that platform and has the final say on the rules of that centralized exchange space.

Centralized finance (CeFi) markets are like an online bank. The financial system allows you to access services like asset storage, often from anywhere in the world (as long as you have an internet connection), but you still fall under a central exchange run by a central authority.

What are Decentralized Finance (DeFi) Services?

Decentralized finance (DeFi) services do not have centralized exchanges and are not normally connected to global markets in the same way.

Without centralized exchanges, most use independent blockchain platforms that are automated and self-governed, allowing anybody to participate.

The end goal of most decentralized finance systems is to create open-source, transparent, permissionless, easy-to-access banking services — full financial freedom.

However, this also means that certain benefits of traditional financial products and services can’t apply to DeFi platforms.

Not having financial institutions involved limits the kind of robust financial system that DeFi services perform but also breaks away from the limitations of relying on a central exchange.

Many people turn to a DeFi ecosystem for this exact reason, getting more freedom with their own money and digital assets. (read more)…

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