{"id":19206,"date":"2022-10-06T12:08:56","date_gmt":"2022-10-06T12:08:56","guid":{"rendered":"https:\/\/zebpay.com\/au\/?p=19206"},"modified":"2025-09-25T06:56:29","modified_gmt":"2025-09-25T06:56:29","slug":"what-is-cefi","status":"publish","type":"post","link":"https:\/\/zebpay.com\/au\/blog\/what-is-cefi","title":{"rendered":"What Is CeFi?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#How_Does_CeFi_Work\" title=\"How Does CeFi Work?\">How Does CeFi Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Benefits_of_CeFi\" title=\"Benefits of CeFi\">Benefits of CeFi<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Centralised_platform\" title=\"Centralised platform\">Centralised platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Fiat_Conversion\" title=\"Fiat Conversion\">Fiat Conversion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Easy_Borrowing\" title=\"Easy Borrowing\">Easy Borrowing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Interoperability\" title=\"Interoperability\">Interoperability<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#How_Do_You_Earn_Yield_With_CeFi\" title=\"How Do You Earn Yield With CeFi?\">How Do You Earn Yield With CeFi?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Why_Is_CeFi_Borrowing_Related_to_CeFit_LendingSaving\" title=\"Why Is CeFi Borrowing Related to CeFit Lending\/Saving?\">Why Is CeFi Borrowing Related to CeFit Lending\/Saving?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#What_Are_Some_CeFi_Risks\" title=\"What Are Some CeFi Risks?\">What Are Some CeFi Risks?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Many_CeFi_Providers\" title=\"Many CeFi Providers\">Many CeFi Providers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Privacy_Risks\" title=\"Privacy Risks\">Privacy Risks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#No_Government_Guarantee\" title=\"No Government Guarantee\">No Government Guarantee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Transaction_Fees\" title=\"Transaction Fees\">Transaction Fees<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/zebpay.com\/au\/blog\/what-is-cefi\/#Final_Thoughts\" title=\"Final Thoughts\">Final Thoughts<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Crypto has brought with it brand-new opportunities in the field of finance. Dubbed DeFi, these new possibilities combine decentralisation and smart contracts and allow you to save, lend, borrow and trade without any bank or third party. However, since the field is so new, it comes with its own complications. This is where CeFi comes in. Centralised Finance provides some of the benefits of DeFi with the security and ease of traditional finance options.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Does_CeFi_Work\"><\/span>How Does CeFi Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CeFi works through offerings by various centralised firms in the field. Several popular crypto exchanges like Coinbase and Binance offer CeFi services.<\/p>\n\n\n\n<p>To begin, users of CeFi platforms must open an account with such service providers. Once you deposit your crypto holdings into this account, you can engage with the CeFi platform. Your crypto holdings are then used to issue loans in crypto tokens to borrowers on the platform. The interest they pay on such loans is what enables you to earn from CeFi.&nbsp;<\/p>\n\n\n\n<p>CeFi is a new field. This means that your money is not protected by the government. This makes it important to choose your platform wisely. However, most platforms offer conversion of your crypto deposit into fiat currencies. For example, Coinbase allowed deposits in USD Coin (USDC). USDC is backed by reserves of the fiat currency and offers conversion back into US dollars.<\/p>\n\n\n\n<p>Read more: <a href=\"https:\/\/zebpay.com\/au\/blog\/difference-between-usdt-and-usdc\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between USDT and USDC<\/a>&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_CeFi\"><\/span>Benefits of CeFi<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Centralised_platform\"><\/span>Centralised platform<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>While crypto usually operates on a decentralised basis, centralisation comes with its own benefits. Centralised exchanges can provide you with security in a new and unfamiliar market. They sometimes offer you a guarantee on the principal amount deposited by you.&nbsp;<\/p>\n\n\n\n<p>This also leads to greater credibility for the platform. If a DeFi platform is hacked, no party can take accountability for the breach. However, CeFi platforms are developed by the firm behind them. Customers may find it easier to entrust their money to a platform when they know who to hold responsible for any breaches.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fiat_Conversion\"><\/span>Fiat Conversion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Converting your holdings to cash is harder in <a href=\"https:\/\/zebpay.com\/au\/blog\/an-introduction-to-defi\" target=\"_blank\" rel=\"noreferrer noopener\">DeFi<\/a> as all services are peer-to-peer. If you have large deposits, converting all of them into cash may take a long time. CeFi solves this problem by drawing from various sources of liquidity. Centralised exchanges make it much easier to withdraw your holdings into cash.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Easy_Borrowing\"><\/span>Easy Borrowing<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As long as you deposit crypto as collateral, you can secure loans with almost no paperwork. This makes the process hassle-free and enables users to borrow quickly without needing a credit check.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Interoperability\"><\/span>Interoperability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Many DeFi platforms do not allow for cross-chain exchanges. Due to the difficulty of completing these transactions, it becomes unfeasible for the platform to offer this service. However, CeFi has access to many other sources of liquidity as mentioned above. This enables them to offer cross-chain services with ease.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Do_You_Earn_Yield_With_CeFi\"><\/span>How Do You Earn Yield With CeFi?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yield generation with CeFi is similar to holding money in the savings account of a traditional bank. When you deposit money on a CeFi service, that money is lent out to borrowers. In turn, these borrowers repay the loan with interest. Part of this interest is collected by the exchange offering the service, while the rest is distributed among lenders.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Is_CeFi_Borrowing_Related_to_CeFit_LendingSaving\"><\/span>Why Is CeFi Borrowing Related to CeFit Lending\/Saving?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a traditional bank, you cannot take loans without collateral. The collateral offers borrowers an incentive to repay the loan amount back to the bank. Similarly, CeFi services require you to deposit your crypto as collateral against any loans you take.&nbsp;&nbsp;<\/p>\n\n\n\n<p>This provides a security measure for the platform and acts as a safety net for lenders if the borrower defaults on the loan.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_Some_CeFi_Risks\"><\/span>What Are Some CeFi Risks?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Many_CeFi_Providers\"><\/span>Many CeFi Providers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Each CeFi service is separate from another and may operate on different principles. It is essential to do your own research and find the best provider for your investment.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Privacy_Risks\"><\/span>Privacy Risks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When you sign up for a CeFi service, you must provide your name and other personal information connected to your account. In the case of a breach or hack, you may lose your money or have your personal details revealed.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"No_Government_Guarantee\"><\/span>No Government Guarantee<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In case a traditional bank faces a crisis and loses money, your money may be insured by the government. This is not a possibility with CeFi services and your deposits are not protected by the government.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transaction_Fees\"><\/span>Transaction Fees<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Since there are intermediaries in a CeFi service, the transaction costs are higher than those on decentralised platforms.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span>Final Thoughts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CeFi provides you with the opportunity of much higher returns than traditional savings accounts while also granting the benefits of centralised service providers. Centralised lending is a great way to start ones Crypto investment \/ trading journey. It is a new field that makes business and personal loans easier and quicker through crypto. It is crucial to carefully choose your service provider and check Cefi rates before deciding to invest.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Crypto has brought with it brand-new opportunities in the field of finance. Dubbed DeFi, these new possibilities combine decentralisation and smart contracts and allow you to save, lend, borrow and trade without any bank or third party. However, since the field is so new, it comes with its own complications. This is where CeFi comes [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":19209,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[14],"tags":[79],"class_list":["post-19206","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto","tag-blockchain"],"acf":[],"_links":{"self":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts\/19206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/comments?post=19206"}],"version-history":[{"count":3,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts\/19206\/revisions"}],"predecessor-version":[{"id":25575,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/posts\/19206\/revisions\/25575"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/media\/19209"}],"wp:attachment":[{"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/media?parent=19206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/categories?post=19206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zebpay.com\/au\/wp-json\/wp\/v2\/tags?post=19206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}