Bitcoin Forum

I took the title from this interesting article:

https://cointelegraph.com/news/the-battle-between-defi-cefi-and-the-old-guard


What's the future of finance is gonna be like? The other day I met a guy who called Bitcoin a pet rock because it can do nothing beside sitting in your wallet until you sell it later and I think that guy is salty because he never really use BTC as a store of value or even a currency, then praising eth because he said that he can do a lot with it.

Any interesting take from Bitcoiners on this (DeFi) hot topic? Is the lending/borrowing market really that big? I mean, is there any battle at all? My understanding is that DeFi requires a person to do this and that bla bla bla for them to start earning interest on their crypto while the so called CeFi can do all that as easy as using Paypal to most people. Would love to hear your thoughts, specially those who maybe ever earned something from both DeFi and CeFi once.

I was considering the idea of making some sort of hybrid system across the two as I think it'll probably be one of the next major steps.

Essentially, as a company you'd have a bank account in different countries (wherever had favourable interest rates) - eg Europe/Canada, oceana and the US and then you'd lend money to whoever offered the least rate either on defi, cedi or innovative finance (p2p - with cash).

Also a diamond is a pet rock...

DeFi is a marketing term that has become used by many currencies to obtain free promotion, and it is not a technology that can provide a lot, and therefore it is just a bubble that ends, as happened with ICOs, IEO,...etc.
Money is not the problem and obtaining funding is not the reason for the success or failure of projects. Rather, ideas. If the way of thinking and how to obtain money changes, then the project will succeed.

Obtaining more funding will not solve the problem.

With the old way of hodling, BTC could indeed somehow be likened to a pet rock whose value is rising over time. With DeFi, hodling would mean your BTC itself is growing as well. But the catch is that you are not owning it in the strict sense of the word because it is deposited in someone else's wallet, where a third party is using it as a capital for lending, for example.

That is what is happening in our current centralized fiat banking, only that we are actually given an insignificant portion of the profit and without the use of the latest technologies such as blockchain, smart contract, and the like.

The question is, how much is the cost of security? If your DeFi investment yields 15-20% of profit a year, is that high enough ROI to somehow balance the risks that come along with leaving your funds in the hands of a third party? As early as now, there are already millions burned due to DeFi exit scams.

Funding will obviously kickstart the expensive development businesses need to have, however, from what we've seen in this industry a lot of these startups have not built much based on the funds raised.

The great thing about this DeFi wave is that it is being acted upon action of building. We have apps and products (even if they are simple) that are WORKING for the general public and abroad. From 2016-2017, crypto had entered into elementary school in which ideas were being thought of but execution wasn't always there. Now we're entering a stage where we are building on these ideas while keeping UI/UX into account as a priority. Yield farming has been a success because anyone is actually able to use it and leverage it to their advantage.

Perhaps in the coming years, when DeFi and CeFi join forces, we will have advanced solutions that are easy to use and allow us to enter this new digital economy we've been aiming to build.

Someone correctly mentioned - Diamond is also a pet rock! Just not everyone is privy to such pet rocks like Diamond or Bitcoin! Only few percentage of lucky people can get to use them! If the person has not used bitcoin in his entire life - his comments on bitcoin has no value because it comes from his perspective and not experience!


Contrary of the popular belief - Defi is not only about lending/borrowing market. Only a handful of Defi companies are using it. It is lot more than this! Try to know about liquidity mining as it is the hottest topic on Defi right now with Uniswap! I personally see no battle between Defi and Cefi. Defi is simply miniscule in front of the traditional centralized finance. However, they are growing at a good rate as more and more eyeballs are getting attracted to defi everyday. So if someone is turning blind eye from any one of these - is simply loosing opportunities. A gentle mix in Defi and Cefi in your portfolio will help you to get the best out of two worlds and it is much more desirable than a battle!

That guy obviously is an Eth holder. I'm a holder of both cryptos and I'm happy to have more with bitcoin but I don't act like that or describe the other one as something as funny or bad.
I see that the defi proliferation is just going to be temporary, if we compare this to the past years. They're not that much far from ICO.

They are actually. In DeFi, if we take lending for example, you put your coins at work for some interest.  During the ICO madness you could have given your money to some guy somewhere only to realize that at the end your ICO tokens were worthless.  I can concede that ICO and DeFi are similar if we think that people are in only for a quick buck.

DEFI and CEFI are both profitable.
CEFI on major trading platforms provides better and safer returns because they have secure technology and are willing to be responsible for the money they hold of investors.
The worst-case scenario is that they were attacked and had their money taken. When they are unable to pay, they will refuse responsibility.
DEFI is more interesting because it is decentralized and no one controls it but the important issue is the project's source code because there are many Bug rebase token projects that cause the project to cost the investor like SYFI, Yam, BZRX.

I have been saying this for sometime now. DeFi as propagated by the various lending/ liquidity protocols that have emerged are no different from CeFi when it comes to ideology. Both worship money and make the rich richer using complicated terms and calling it investment banking.
As we all know, Investment bankers are rich and smart as well as assholes. DeFi has just democratized this. If you have the time and money to spend, you too can sell "derivatives" to unsuspecting "investors", create wealth by increasing its circulation and be happy till the chickens come home to roost.

Once again, as we all know, the chickens NEVER come to roost in case of CeFi. Even if they do, the bankers lose nothing except getting a few millions in bonus. So please don't compare this DeFi with CeFi. They are essentially the same.

@jackg, really like your idea. If that can allow people to take lower interest loans, it'll be great. Though how many legal and financial regulations this will break is unknown.

A lot of interesting takes. Thanks, everyone. My thoughts are just the same, though I think that this hype is far different with 2017 ico craze. Lots of new things coming in and I myself still hoping that there's gonna be a Robinhood-like App that can operate globally with ease of payments that will make Bitcoin far more reachable by a lot of people.


Jesus Christ, Marie! They're minerals...

CeFi is technically part of the traditional financial world, considering that they can't operate normal without being regulated in the old way. DeFi would be regulated decentrally otherwise it's not a Decentralized Finance.  
By the way, No public company/business should be centralized in the first place. A company could actually become decentralized if  is very transparent, with checks and balances, and adopt other important practices to keep its owners/stakeholders in checks


I don't think both (DeFi & CeFi) should be combined. They should exist seperately. Part of the reasons for this is to prevent the possibility of a Cefi remaining centralized and corrupting the idea of decentralization.   The least you could do to keep things sane/honest in the DeFi world is to clearly label the well Decentralized Applications - DeFi & the Centralized Applications - CeFi

The Future of Finance should be Decentralized Finance. I tolerate the CeFi abit because they are similar to the traditional financial world, and  most people still depend on the traditional finance

Whenever it comes to "regulations" as in Financial and Legal regulations, DeFi platforms will go the same way that ICOs went with KYC and citizens of certain countries not being able to participate. Right now, the money locked in DeFi platforms like Uniswap or Curve doesn't need KYC which truly is astonishing considering that the funds locked is now approaching tens of billions in USD now. How long it stays this way is not guaranteed.


Businesses never do good with decentralization as there is no longer the driving force of profit motive. Bitcoin is decentralized but it is not a "business". The original vision of DeFi too wasn't simply business for profit. It was supposed to be about being free from the shackles of big banking corporations which are either not interested in providing honest banking services to millions in poor countries or are actively involved in keeping those countries that way by financing manipulations and wars. At present, A few platforms have enabled people with a lot of money to earn huge chunk of fees in the form of Ethereum gas from small retail buyers. This is what they are calling DeFi. Devs joking about finding people to dump (https://twitter.com/udiWertheimer/status/1308686851071410176) is just the way things work here.

Assuming most of these platforms retain a partially centralized infrastructure (even though they may be non-custodial in nature), then you're probably right. As long as there is a centralized team, servers, etc. they can go after, they probably will. Fully decentralized platforms can't truly be regulated the same way.

One caveat. Securities (in other words, most ICO tokens) are the most tightly regulated instrument, period. And the SEC has broad authority over them, which means regulation can be relatively swift and targeted, as it was with ICOs. Lending is a bit more complicated, being regulated by 5-6 different federal regulators depending on the exact function, as well as being partially regulated at the individual state level. I think that makes lending platforms inherently more difficult to target. And like I said, the more decentralized the platforms become, the more difficult they will be to target too.

I do think it actually depends on what you want to do with it , one cannot decide one type altogether , it is mainly dependent on :

- What the currency has to offer
- what you have to use it for ?
- Is that legal in your country etc....

We have to fill in many details before we can actually reach a conclusion , for some one would be better to use and for practical purposes and for others , other one.

As for me I strongly believe deFi is more important since we already have a lot of centralized ones and this gives us more freedom , during pandemic there comes a security with them too in certain countries which are really suffering from all this.

They're all rock Hank. Water in the end is more important says Dora.

If we just look at Defi as simple as for funding the project, its just the same as those ICO and IEO. New projects can be added on Uniswap jus to have a head start.
If may pass some time later but then the system will still be here just as DEX that had been existing since time. They just add some ways to have more liquidity. If a person has the intention to earn income, he'd put his funds to the liquidity pool to earn for every swapping.

I think the first DeFi projects were actually trying to achieve something new, we do not know if they will be successful but that is the price we need to pay for innovation, however as soon as scammer realized the opportunity they had in front of them they released hundreds of coins that were useless, as such at this point in time the DeFi market has transformed itself in something similar to what we saw in 2017 with the ico market and most likely it will suffer the same fate as well.

It is a good idea to combine traditional and modern systems to create DEFI and CEFI. but basically their systems are organized differently. instead of wanting to combine DEFI and CEFI wouldn't that break both? If we are serious about combining the two from the DeFI side we take the value of transparency and the speed from the CeFI side we take legality and service

There were projects during the ICO era that were also offering lending. That's why probably I've said that they're not far from those projects that have existed before.
Some differences might be there but that's what I'm thinking about them lately.

At first there were only CeFi, what difference do they have with fiat based institutions anyway? Seem like a synonym for me minus the technicalities. They are financial companies and they are centralized. So 1+1 is 2 here.

DeFi was here before even knew it, projects like BitRefill were the pioneer of DeFi though some DeFibois will refute that I am wrong about it. Point is that these projects have been less known when the ICO trend was going up. The bad thing is that this sudden hype about DeFi in terms of stablecoins, lending pools and staking pools is bad for the investors. It is a bubble and the real DeFi projects never boomed that much.

I think it is way too early to call mixing of DeFi and CeFi. Lets see how legit these DeFi tokens end up to be first.

I think I agree, it has not been seen what has been made by Defi and only news that seems very enthusiastic and jarring when the situation is indeed worsening. but can we guarantee that it will be good from other systems and this needs very clear proof and not only he said. because all this time all systems are always good in the beginning, finally back to what is usually experienced.

How is the current situation worsening? From what we've seen, most businesses are focusing on building a better user experience and use case instead of raising funds through kickstarter like platforms.

Perhaps the maturity levels will develop sooner rather than later as we enter this new digital economy combining DeFi and CeFi.

Just plain talk and promotion of anonmynous stablecoin pools and lending pools. Does that really help? Nope. What they are doing is milking this hype and attempting to prolong the bubble long enough to get money from a lot of investors. Back on the ground level, crypto is a niche sector. Not ventured by bigger whales of the traditional markets. You cant expect a new project to become huge here without a real use case.

Nope, it is all vaporware if you ask me. Someone might refute that I am too narrow visioned but I have seen bitcoin a few years from its inception and altcoins when they started. Ask me, these are bubbles that tried to follow the price rise of bitcoin nothing more than that and this one is same. CeFi and DeFi are made up terms. Focus on bitcoin if you really care about your money in this sector.

I think the same just, as the bubble of 2017 damaged bitcoin to the point it took years to recover from the crash that it followed, and the same happened to icos and in their case they have not recovered yet, and I do not think they will ever recover, DeFi coins that existed before the current bubble were ignored but there were good projects there but now thanks to all the scammers that are taking advantage of the ignorance of investors we are seeing scams almost everyday and this is not going to be good for a market that was just starting to gain some traction.

It is very bad that the legit projects who were actually providing a service worth recommending to others never got that traction they needed. Although I still promote about bitrefill in other places if someone asks for it, currently the DeFi trend of lending pools, swap pools and so on are taking over.

Lets compare this with older models of "scams"

Passive income from staking - this become uniswap liquidity pool. It is essentially the same thing. Although Uni is having a good amount of investor backing, how much we can trust them with our coins is questionable. Take your own risk for that, I am not going to support it. Uniswap is for swapping and that is the only thing I am interested in.

Altcoin craze - they are comparable with the DeFi tokens. What is worse is that altcoin projects did have teams and a real roadmap in at least 1% of the cases being legit. These DeFi "yield farming" and other bullshit are not even willing to show their team members. This may lead to a lot of scams before the idiotic-investors actually get a grip of the field.