What you’ll learn:
- What is crypto banking: CEFI vs DEFI.
- The CEFI model vs traditional banking.
- Popular CEFI providers.
- Get started with CEFI earning crypto interest or taking a crypto loan
The crypto ecosystem is evolving rapidly, with new services being created that enable you to do more with the cryptocurrency than just holding it. One of the biggest areas of development are crypto banking services.
Crypto banking services are broadly split into two categories which differ in terms of custody – who is ultimately in control of your funds – and the potential returns you might expect because the risks involved are different.
CEFI (Centralised Finance) – Where a service provider holds custody of your funds and provides familiar banking services such as interest and loans. Lower rates with lower risk.
DEFI (Decentralised Finance) – Where you custody your funds but interact with Smart Contracts which give you access to hybrid banking services such as liquidity provision and yield farming. Higher rates due to higher risk.
This article is focused on getting started with CEFI, while the following article offers an introduction to using DEFI.
If you are confused about the idea of custody, read this article on crypto storage and security, then come back, as it will help make sense of the core distinction between CEFI and DEFI.
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