Back to Home
CeFi
(Centralized Finance)
CeFi (Centralized Finance) refers to traditional, institutionally controlled crypto services (e.g., Coinbase, Binance), contrasting with DeFi's trustless protocols. Offers fiat on-ramps, custody, and user recovery options.
Despite higher fees and KYC requirements, CeFi dominates retail crypto trading (75% volume). The 2022 collapses of CeFi lenders like Celsius ($4.7B losses) exposed risks—misaligned incentives, opaque accounting, and overleveraged BTC bets. Regulators (SEC, CFTC) increasingly target CeFi (e.g., Binance's $4.3B settlement). Hybrid "CeDeFi" models emerge, combining CeFi compliance with DeFi yields. Institutional CeFi services (e.g., Fidelity Crypto) aim to bridge traditional finance and digital assets.
Despite higher fees and KYC requirements, CeFi dominates retail crypto trading (75% volume). The 2022 collapses of CeFi lenders like Celsius ($4.7B losses) exposed risks—misaligned incentives, opaque accounting, and overleveraged BTC bets. Regulators (SEC, CFTC) increasingly target CeFi (e.g., Binance's $4.3B settlement). Hybrid "CeDeFi" models emerge, combining CeFi compliance with DeFi yields. Institutional CeFi services (e.g., Fidelity Crypto) aim to bridge traditional finance and digital assets.