8 Perks of Decentralized Finance

Comparing government-backed CeFi and blockchain-based DeFi

  1. One of the core values behind DeFi is that it gives access to financial services to anyone irrespective of their citizenship and location. In CeFi, finance is accessible only to the citizens who have no problems with the documents, have a good credit history, and so on. All operations here are tracked by banks and, hence, governments.
  2. Unlike CeFi, DeFi works without any intermediaries between a user and a service provider. Moreover, in DeFi, the governance and the rules by which a service operates are transparent — most DeFi protocols are open-source.
  3. In CeFi banks, a sum of money in your bank account isn’t really the funds you own — it’s just a guarantee that a bank will allow you to pay with or withdraw this sum when you want to. In DeFi, you have more control over your funds as you trade them right from your crypto wallet, which means no entity can freeze or limit your access to your money.
  4. DeFi is accessed through dApps that are available worldwide 24/7. There are no opening hours, no days off, no limitations to geolocation.

How is decentralized finance better than centralized one?

  1. Accessibility

Main challenges for decentralized finance

  1. DeFi is yet to become a mature industry. Lack of regulation and the speed of evolution leave room for bugs in smart contracts and malicious activity. These two often lead to money losses for unlucky users.
  2. If something happens to your money in a bank, you can go there, ask what’s happening, and a bank officer will help you get your money back. In DeFi, there’s only a support team for each project, but they can’t do anything to your funds once sent due to the nature of blockchain.

Bottom line

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