Sometimes they are considered incompatible, but this is erroneous. Decentralization is a key advantage and an improved version of the modern market. It is likely that cryptocurrencies and classical banking together will successfully develop through integrated solutions, which means mutually beneficial ecosystems. In this article, we tell you what CeDeFi is, where they can be used, and which projects have already taken advantage of the mixed ecosystem on their sites.
Pros of CeDeFi
CeDeFi solves several problems. Thanks to a mixed ecosystem, it becomes possible to easily open up new tools, beginning with decentralized exchanges (DEC) and ending with lending protocols with lower transaction fees.
- Reduce fraud. All CeDeFi projects are thoroughly checked.
- Easy to introduce new products. Decentralized applications (dApps) can be hosted much faster by taking advantage of cross-chain technology.
- Get more from your investment. Access to an increased annual rate of return is opened for investors.
- Experiment. It is possible to enjoy the DeFi ecosystem and at the same time adhere to the rules associated with KYC and AML.
- Save on operating costs. When using CeDeFi, fees are significantly lower and transactions are faster.
- Enhance security. The Unified Finance System emphasizes the safety, reliability, and transparency of DeFi products.
- Lower the entry barrier. New users are shown pre-checked and sorted information on trading, KYC, commissions, and so on, which allows beginners not to step on the same rake.
Already in 2022, we can expect the introduction of CeDeFi in enterprises. This requires clear regulatory guidance to make DeFi technology acceptable. However, we can already say that CeDeFi can be useful to any user.
- Companies can use advanced DeFi products in their work, while not violating the rules of traditional financial regulation.
- Traders can find the best trading deals based on liquidity, crypto fees and KYC — it reduces slippage, increases asset availability, and improves security.
- A business can develop its own smart contracts by implementing financial products and services on a single platform, thereby reducing risks and speeding up transactions.
- CeDeFi addresses the regulation and compliance issues of cryptocurrencies and lays the groundwork for the institutional custody of DeFi protocols.
- Security tokens could advance in bond issuance and stablecoin settlement - fast, cheap and easy-to-use DeFi protocols are transforming the global payment system.
Developing CeDeFi projects
The first case of combining these two ecosystems was creation of BNB chain.Following the example of such a large international company, many cryptocurrency networks have begun to explore the possibility of their own transformation, which will retain all the benefits of DeFi, while centralized participants will have access to the network.
Some have already provided an integrated solution. We have identified 5 projects that are worth paying attention to.
The first CeDeFi ecosystem combines a large number of centralized and decentralized exchanges and cryptocurrencies. On the platform, you can get acquainted with a wide range of digital assets, while adhering to KYC.
The ecosystem is based on Unizen modules with a built-in centralized cryptocurrency exchange (CEX) function, third-party modules with DeFi technology integration, as well as custom logic that combines advanced trading capabilities, including a cross-chain trading aggregation algorithm and social sentiment indicators.
Unizen aims to streamline issues related to liquidity, slippage and KYC. In order to meet the liquidity conditions in DeFi, the platform has partnered with AllianceBlock. In addition, Unizen provides users with dynamic staking across multiple assets – they can earn rewards in the form of tokens and participate in private sales by staking the native ZCX token.
CoinZoom is a centralized crypto exchange designed to trade cryptocurrencies and use digital coins in the real world. It offers users to invest in more than 30 tokens, which provides the opportunity to receive a variety of DeFi rewards. This perfectly complements CoinZoom and increases the chances for the integration of centralized and decentralized finance.
Among other functions, CoinZoom allows you to use a Visa debit card, and also makes it possible to send digital coins to anyone anywhere in the world in the shortest possible time. The crypto exchange has its own Ethereum-based ZOOM governance token, which also helps bridge the gap between CeFi and DeFi.
Nexo is a digital asset lending company. Among its services are an exchange, a cryptocurrency card, borrowing and lending. Nexo is a CeFi company. Meanwhile, the ecosystem is also fueled by decentralized autonomous organizations, or DAOs. They allow NEXO token holders to take part in voting for the further development of the project.
However, developers can sometimes interfere with the activities of Nexo, which can disrupt the decentralized approach of the project. The company addresses this issue by providing DeFi developers with the infrastructure to develop products that meet regulatory requirements.
CeFi Nexo provides DeFi technologies with a regulated ecosystem under construction based on its knowledge, industry connections and licenses around the world. At the same time, CeDeFi solutions allow you to control DeFi developments and protect users of centralized and decentralized finance.
Bybit is a cryptocurrency derivatives exchange that sells BTC and ETH futures. In addition, it provides other financial instruments. The exchange is very popular, especially in Asia.
Like any derivatives exchange, Bybit has two options - either follow traditional financial standards or develop products based on a decentralized approach. It is most likely that Bybit will provide centralized products through a decentralized way, as the company has already begun to explore this option.
Binance Smart Chain (BSC)
The world's largest crypto exchange, Binance, has developed a BNB chain to enable DeFi developers to deploy their decentralized applications, or dApps. Since then, most DeFi projects have adopted the BNB chain as their home and have been taking advantage of both ecosystems without issue.
This approach, namely the integration of CeFi with the crypto market, has become popular with DeFi users. Today, the 24-hour trading volume allows you to compete even with Ethereum. However, a part of the crypto community still doubts the novelty of BNB chain CeDeFi.
Binance's 2020 experiment to combine a centralized exchange and decentralized finance could be the starting point for the full integration of CeFi and cryptocurrencies. This could also be facilitated by the fact that there are clear problems with security, control and transparency in traditional financial services today - people are gradually starting to take a closer look at decentralized finance. So one strategy for attracting users and introducing regulatory compliant products is to create the CeDeFi ecosystem.
Of course, it will take time for not only investors but also traditional institutions to fully integrate. But already now users can see how CeDeFi is beginning to transform the financial world.