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Centralized Financing (Cefi) What exactly is it? 5 top Cefi platforms

Centralized financial or CeFi is a very popular topic within the world crypto trading. This technology was able to expand the financial trading system used in crypto trading to a higher level. With the introductions of CeFi and DeFi, the crypto exchanges offered a lot more products and services than just trading. This includes crypto derivatives, crypto loans and tokens that could be exchanged to digital assets.



In this post, we dive deep into the subject and understand all about CeFi and how it functions.




What is centralized finance ? (CeFi)



Centralizing is the process of concentrating on the supervision of an operation under the authority of a single entity. This is also true when it comes to Crypto trading. CeFi refers back to the notion of passing all crypto trading orders through central exchange.


The currency being used is controlled by those responsible for the exchange. This means that if they don't possess the private key they won't have access into their wallet. In addition the exchange is responsible for choosing the currencies that are available, and also the amount that users must pay to trade on their platform.




If you're looking to earn income through CeFi, crypto-based accounts are similar to regular bank saving accounts. However, the profit of these accounts can rise significantly. The only negative aspect of CeFi is that crypto-based deposits are not covered by the FDIC or SIPC.




CeFi is typically used for loans, borrowing, and exchanging cryptocurrency. The CeFi has a few applications that include,




BlockFi


Celsius


Fairlay


Ledn




Difference in CeFi and DeFi



When it comes down to differences between DeFi and CeFi platformsthere's quite a few. In terms of exchange, the method used by the two is the most apparent distinction. While CeFi uses exchanges in centralized finance , DeFi is technology-dependent.




Another distinction is the risk-taking of the exchanges. On what is cefi , the risk shifts over to exchanges as a consequence of the exchanges' commitment. However, in DeFi transactions are made based on assumptions, and the middleman is not available.




CeFi is also capable of transfer funds to help customers or to prevent trades occurring in poor situations, like hacks. between cefi defi is fully able of imposing limitations on the customer, however CeFi isn't able to do that. DeFi works in a non-intrusive, private method as it doesn't need personal data of the client.




There are pros as well as cons CeFi



Let's review the things CeFi can offer and also what it cannot perform compared to DeFi.





Pros





Fiat conversion's versatility



CeFi is the way to go when converting Bitcoin into bitcoin and cash into cash. The reason behind this is the better flexibility of conversion. The conversion of cryptocurrencies to money generally requires the use of CeFi however DeFi cannot offer such flexibility when it comes to conversion.




Centralized exchanges




The exchanges which take place surrounding a CeFi platform are more reliable. Even though the money held in exchanges is maintained outside and under the control of a client, they are at risk only if certain security features of the exchange are not met. This causes clients to be aware of exchanges and trust their personal information to them. Most of the exchanges have dedicated customer support staff to ensure the best experience for their customers.




Service for Cross-chains



A major advantage CeFi does not have over DeFi is having the option of trading different types of coins that belong to independent blockchain platforms. They include coins such as LTC, BTC, and XRP. The process involves acquiring ownership of these assets on several chains. Since most of the biggest market-cap coins are on separate chains, CeFi can offer this service. a benefit of CeFi because DeFi is not able to provide this type of service.




Cons





Less transparent



The platforms that revolve around DeFi are based on technology, and they offer greater transparency. It's not so for CeFi. CeFi's inherent nature is the primary reason for the lack of transparency.




High transaction fees



There are no middlemen involved in transactions conducted in CeFi systems. Naturally, top cefi platforms means that cost of transactions to be higher than the normal. This is one of CeFi's major negatives CeFi that makes customers move toward DeFi.




Security risk from hacks



CeFi systems are a site that carries the finances and personal information of many customers. Thus, the threat of an attack by cybercriminals is extremely high. What' difference between defi and cefi about this is that your financial information as well as personal information could be at risk through CeFi.




The Top CeFi Platforms



Many platforms come with CeFi facilities. Let's look at a handful of them.




Celsius



Incorporated by Alex Mashinsky in 2017, Celsius is one of the leading CeFi platforms. The platform supports over 1.4million users and is home to more than $22 billion in assets. Its features include crypto lending, loans, and payment are all possible on the platform.




When it comes to the amount of money you can earn from lending Celsius it is contingent on,




The loan token


The amount that you can lend


Your location


Currency of interest



Celsius uses a particular token named CEL This token works as a reward to provide customers with better rates when you are borrowing or lending. By keeping a larger percentage of your possessions will enable you to earn higher rewards. The Celsius app is also useful when you are borrowing coins.




Swissborg



Swissborg is another CeFi platform with a few unique features. Contrary to other platforms Swissborg does not permit borrowing. Instead, it has yielded earning possibilities.




This platform comes with features such analysis tools as well as portfolio statistic gauges. However, most of these features are available to Genesis Premium users. To become a premium member you need to have 50 000 GHSB tokens ($30k). This is an enormous turn-off for many as it's an large amount of money to invest. But if you can be an genesis premium member and earn more money, it will be better than other platforms.







Nexo




It was created in 2007 and was launched in the year 2018, Nexo has a number of customers of 2.5 million. nexo cefi has received over $200 million in interest. The distinctive feature of Nexo is its ability to allows customers to make payments using the card as well as for the standard ways of borrowing and loaning.




The exchange is renowned for its excellent rates for nearly all tokens, and often the interest on borrowing can be as minimal as zero percent. It is also possible of getting loans in exchange for your NFTs. This feature is currently available for Crypto Punks and Bored Ape Yacht Club collections.







YouHolder



The platform was established in 2018 and can support multiple currencies that others don't. YouHolder provides lending and borrowing service, but not a payment card. Multi-Hodl as well as Turbocharge are distinct features of the exchange and are superior versions of borrowing and lending.




BlockFi



BlockFi is an exchange platform that does not have a local currency and is able to raise capital through Venture Capitalists. The company was founded in 2007 offering the essential functions of borrowing and lending. The only issue with this platform is that it only supports 13 varieties of crypto.




The thing that makes BlockFi unique is that it allows customers to earn interest using stablecoins. This is perfect for tax planning. It also offers a 90-day period of 3.5 percent cashback for its payment card.




Conclusion



Fairtrade and security of funds are key terms when the CeFi system is in use. With better customer support and security for financial transactions, CeFi can be beneficial for cryptocurrency traders, as well as traditional investors. The two CeFi and DeFi have pros and cons . the moment you're looking for a reason to invest in one, we strongly recommend doing an exhaustive study of both to determine which one is best suited for you.









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