With the onset of the blockchain-enable Web3 revolution, financial systems as we know them globally have divided into two categories.
These are the traditional, bank-enabled centralised finance (CeFi) and the emerging crypto-backed system called decentralised finance (DeFi).
And people are still understanding the difference between CeFi and DeFi, a brand-new classification of financial systems has emerge and is popularly abbreviate as ‘CeDeFi’.
Essentially, CeDeFi is the combination of some elements of traditional finance with the new age nuances of the DeFi space.
Investors interest in exploring the flexibility that DeFi offers, but are concern about facing negative consequences, can turn to CeDeFi for a comparatively safer experience.
The CeDeFi term is known to have coin by the CEO of Binance, Changpeng “CZ” Zhao, when Binance launch its Binance Smart Chain (BSC) in September 2020.
The BSC kick off a $100 million (approx. Rs. 800 crore) seed fund design to foster the collaboration between CeFi and DeFi in 2020.
The aim was to grab potential DeFi adopters by placing their trust on something they are familiar with centralise finance.
CeDeFi can help people explore DeFi products, such as decentralise exchanges (DEX), liquidity aggregators, yield farming tools, and lending protocols but with the assurance of CeFi systems.
Binance, for instance, start allowing its users to stake its BNB native token and earn cultivated tokens of other upcoming projects back by Binance.
This allows users to earn some of the benefits of being expose to DeFi, without the burden of interacting directly with DeFi protocols.
This system attract other networks to tweak their systems to keep some parts of DeFi, while making sure that centralise parties can also be accessible for users.
As per NASDAQ, while DeFi had approx. $250 billion (approx. Rs. 19,97,200 crore) in total value locked (TVL) around January, CeFi is much more accustome to handling trillions, the global equity market cap is estimate to be over $100 trillion (approx. Rs. 79,82,24,000 crore), a staggering amount greater than DeFi.
In recent times, CeDeFi brands are seemingly gaining prominence in the crypto world.
Unizen, a hybrid smart exchange ecosystem, is a prominent name in the CeDeFi space.
In June, Unizen bag a ‘funding commitment’ of $200 million (approx. Rs. 1,600 crore) from the investment firm Global Emerging Markets.
In May 2022, EvryNet, a financial services platform announce a strategic merger with Velo Labs, a leading blockchain infrastructure company focused on improving international remittances.
At the time of the merger, both the companies show confidence that this merger will position the reform Velo as a forerunner in CeDeFi space.
Disclaimer : Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by 2YoDoINDIA. 2YoDoINDIA shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.
