Great division: Cryptocurrency vs centralized finances (DIFI) in the era of decentralized exchanges
In recent years, the world of finance has undergone a significant change. The entrance of cryptocurrencies, blockchain technology and decentralized stock exchanges (Dexs) changed the way of thinking about money, commercial and financial instruments. The two most important events in this space are centralized finances (DEFI) and exchange based on cryptocurrency (CEX). While both offer interesting possibilities to investors and traders, they differ significantly in terms of rules, benefits and defects below.
centralized finances (DEFI)
DEFI, also known as decentralized finances, is financial technology that works completely beyond traditional centralized systems. DiFi platforms use blockchain technology to provide access to financial services such as loans, loans, trade and investments. The most famous DEFI examples are:
- Uniswap
(Ethereum): Decentralized exchange of commercial cryptocurrencies.
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- composed
(BTC/ETH): Decentralized interest rate management platform.
The key features of DEFI are:
* Decentralized management : The decision making process is unfolded between participants, reducing the risk of centralization.
* unchanging contracts : Intelligent contracts regarding blockchain ensure the performance of contracts without intermediaries.
* Cross interoperability : The ability to carry actions through various block chains.
* Low commissions and liquidity : lower transaction costs and increase in commercial volume.
Professionals:
- Safety increase : Defi platforms are more resistant to hacking and censorship due to their decentralized nature.
- lower transaction commissions : Transaction committees are generally lower than centralized exchanges.
- Improved user experiences : Decentralized technology enables greater flexibility in terms of user interface, usability and adaptation.
Against:
- Limited liquidity : liquidity suppliers often do not have resources to absorb large amounts of market data, limiting their potential impact on prices.
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centralized finances (CEX)
Traditional centralized finances (CEX) operates through a network of banks, investment companies and other financial institutions that operate as mediates between investors and financial markets. CEXS provides access to financial services such as trade, loans and investments, but with a centralized control structure.
The key features of CEX are:
* Centralized infrastructure : Banking systems, financial institutions and investment companies ensure liquidity and care.
* SISTED LEGATION : Governments regulate and apply compliance with regulations and regulations.
* Institutional knowledge : Specialists have extensive experience in risk management and making conscious decisions.
Professionals:
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- liquidity management : centralized infrastructure can manage large amounts of market data, which leads to greater liquidity.
- Regulatory compatibility : Compliance with existing regulations and regulations is generally simpler in a centralized environment.
Against:
- Risk of centralization : CEX are susceptible to centralized control, which may lead to an increased risk of manipulation or hacking.
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