What Is Centralized Finance?
Centralized finance used to be the standard for trading crypto before DeFi came into the picture. It still maintains a stronghold over the cryptocurrency industry. But decentralized finance is catching up with it as DeFi is seeing astounding growth this year through its yield farming trend. In centralized finance (CeFi), all orders in the crypto trade are channeled through a central exchange. The funds are managed by responsible people running this exchange. This means you don‟t own a private key that gives you access to your wallet. Furthermore, the exchange determines which coins they list for trading or how much fees you have to pay to trade using their exchange. To summarize this section, you don‟t truly own your cryptocurrencies when trading via a centralized exchange. Moreover, you are subject to the rules a centralized exchange imposes on you.