CeDeFi essentially combines some aspects of traditional banking with the cutting-edge specifics of the DeFi industry.
Financial systems as we know them today have been split into two groups as a result of the Web3 revolution powered by blockchain.These include the traditional, bank-based form of centralised finance (CeFi) and the burgeoning decentralised financial system (DeFi).While individuals are still able to distinguish between CeFi and DeFi, a brand-new classification of financial systems known as CeDeFi has arisen.CeDeFi essentially combines some aspects of traditional banking with the cutting-edge specifics of the DeFi industry.
Investors can turn to CeDeFi for a somewhat safer experience if they want to explore the flexibility that DeFi offers but are worried about suffering unwanted effects.
When Binance released its Binance Smart Chain (BSC) in September 2020, it is known that Changpeng “CZ” Zhao, the company’s CEO, invented the phrase “CeDeFi”.
A $100 million (about Rs. 800 crore) seed fund launched by the BSC in 2020 is intended to promote cooperation between CeFi and DeFi.The idea was to attract potential DeFi adopters by appealing to their trust in centralised money, which they are already familiar with.
With the security of CeFi systems, CeDeFi can assist individuals in learning about DeFi products including decentralised exchanges (DEX), liquidity aggregators, yield farming tools, and lending protocols.
For instance, Binance began enabling its customers to stake its own BNB token in exchange for developed tokens of other emerging projects it supports.
As a result, consumers can gain certain advantages from being exposed to DeFi without having to deal with its protocols directly.
Other networks were enticed to modify their own systems in order to maintain some aspects of DeFi while ensuring that users could also access centrally located parties.
According to NASDAQ, CeFi is much more accustomed to handling trillions than DeFi because the global equity market cap is estimated to be over $100 trillion (roughly Rs. 79,82,24,000 crore), a staggering amount higher than DeFi. DeFi had roughly $250 billion (roughly Rs. 19,97,200 crore) in total value locked (TVL) around January.
Recently, it seems as though CeDeFi brands are becoming more well-known in the cryptocurrency community.
In the CeDeFi industry, Unizen, a hybrid smart exchange environment, is well-known.
Unizen received a “financing commitment” from the investment company Global Emerging Markets in June for $200 million, or about Rs. 1,600 crore.
A renowned blockchain infrastructure startup, Velo Labs, and EvryNet, a financial services platform, announced a strategic combination in May 2022 with the goal of enhancing international remittances.
Both businesses expressed confidence in the combination’s ability to position the reformed Velo as a pioneer in the CeDeFi industry at the time of the transaction.