BlogDiFi

How can DiFi bridge CeFi and DeFi?

All the fuzz these days are about CeFi vs DeFi vs DiFi. However, what is unique about DiFi is ultimately it’s ability to bridge two the extremes—CeFi and DeFi.

On one side you have CeFi, and as opaque, insecure and unprofitable as it may have been historically, it is the de facto choice that most use on a daily basis. Whenever you swipe your payment card, when you send money to someone—whether it’s Paypal, Revolut or your local bank—or when you take a loan, these are all centralised institutions managing their own closed systems of transaction history, personal records etc.

On the other side you have DeFi, the new kid in class, which was introduced as an alternative to CeFi with Ethereum and it’s smart contract properties, allowing innovators and entrepreneurs to introduce similar financial services that we know from CeFi, but based on blockchain technology and hence being decentralised.

There are many pros and cons with both CeFi and DeFi, which we listed in CeFi vs DeFi vs DiFi, but they are in many ways two extremes. Thankfully, an alternative is starting to show an enormous potential to bridge the two.

 

How DiFi can be the bridge, the middle, between CeFi and DeFi?

DiFi, in a nutshell, is all about letting users control their keys in order to control their assets, but with a twist. The funds they control are IOUs – tokens that represent the underlying assets – with the underlying assets safely distributed across one or multiple custodial wallets. This comes with multiple benefits:

👉 Users benefit from the convenience of others holding and securing their assets
👉 Users hold their private keys
👉 Users can confirm transactions on a blockchain
👉 Users can exchange assets peer-to-peer but with high liquidity
👉 Users can trust that other users are verified and hence legit

This is fantastic news to everyone looking for a better alternative than their current CeFi or DeFi setup, which lacks multiple of these advantages.

For example for DeFi, you only get the following:

👉 Users benefit from the convenience of others holding and securing their assets
👉 Users hold their private keys
👉 Users can confirm transactions on a blockchain
👉 Users can exchange assets peer-to-peer but with high liquidity
👉 Users can trust that other users are verified and hence legit

And when it comes to CeFi, you only get this:

👉 Users benefit from the convenience of others holding and securing their assets
👉 Users hold their private keys
👉 Users can confirm transactions on a blockchain
👉 Users can exchange assets peer-to-peer but with high liquidity
👉 Users can trust that other users are verified and hence legit

 

Pushing the boundaries of DiFi

Being built on the back of blockchain, DiFi as an industry will inherently be dependent on how the blockchain industry evolves, but as the technology matures the industry is likely to follow, and we will start to see more and more competitive offerings in the DiFi space.

As the first platform being fully implemented as a DiFi solution, Blockbasis is in many ways pioneering the DiFi revolution that we’re starting to see, and we cannot wait to introduce more features and services to our users.