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Centralized Finance (CeFi)

Centralized finance (CeFi) is a term used to describe traditional financial systems and institutions that are based on a centralized model of operation. This includes traditional banks, financial markets, and other financial intermediaries that are controlled by a single entity or a small group of entities.

CeFi has been the dominant model of finance for centuries, and it has played a critical role in the global economy. However, it has also been criticized for its lack of transparency, high fees, and potential for abuse of power.

In contrast to CeFi, decentralized finance (DeFi) is a relatively new development that is based on decentralized technologies such as blockchain and smart contracts. DeFi systems are designed to be more open, transparent, and accessible, and they offer the potential for greater financial inclusion and innovation.

Overall, CeFi and DeFi are two distinct models of finance that are based on different principles and technologies. While CeFi has been the dominant model for centuries, DeFi is a relatively new development that is gaining increasing attention and adoption.

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