Defi Manual: Part 1 — Cefi vs. Defi
I started my new series about Defi. I think it is the future of finance. Whether it will replace the current system or integrate it to make it a better place, we want to know what Defi really is and how it works. Of course, these will be multiple parts and they are short to read!
This part 1 article can help you to easily distinguish between Cefi and Defi. Well, I hope it does.
What is Defi?
It is a subset of blockchain technology and is short for decentralized finance. Being decentralized means there is no third party involves but pure peer-to-peer transactions.
The Cefi-Defi spectrum
There are 3 categories of digital finance: Cefi, Hybrid, Defi.
Ask 3 questions
There are 3 control questions to help you out and distinguish between those 3 categories.
1) Can a user control their own financial assets?
2) Can someone overrule a transaction execution beyond a user’s control?
3) Can someone use a protocol to overrule a transaction execution beyond a user’s control?