Overview of the CeDeFi (Centralized Decentralized Finance) concept

Decentralized or DeFi projects have emerged as an alternative to centralized or CeFi services that control users' assets. For example, centralized exchanges such as Binance, Coinbase, or Kraken use a traditional deposit system and store user assets in their wallets, which they fully control.

This approach carries risks for users, as they have to entrust their funds to companies that may go bankrupt, and their systems may be hacked, resulting in the theft of funds.

Decentralized exchanges, such as Uniswap, PancakeSwap, or Balancer, interact directly with users' wallets, giving them full control over their assets. However, decentralized exchanges are also quite difficult to use and vulnerable to various types of attacks.

Over time, the crypto industry has seen the emergence of hybrid models that are partially decentralized and partially centralized. Such models are called CeDeFi.

What is CeDeFi?

CeDeFi (Centralized Decentralized Finance) is a hybrid approach to system design that combines decentralized (DeFi) and centralized (CeFi) financial models.

For example, CeDeFi projects can automate part of the processes through smart contracts but retain partial control over assets, following the rules of regulators, as well as complying with KYC/AML rules and conducting identification of their users to protect investors from financial crimes.

* KYC or Know Your Customer, AML or Anti-Money Laundering.

Hybrid platforms can host crypto assets in decentralized liquidity pools like DEX exchanges but still partially control them to protect against hacks, protocol errors, or fraud.

Benefits and risks of CeDeFi

One of CeDeFi's main advantages is its low entry threshold for newcomers. For example, to interact with decentralized exchanges and other DeFi protocols, users need to understand the principles of cryptocurrency wallets and transactions, create and store private keys, and understand how commissions are structured in blockchain networks. Improper use of wallets on DeFi can result in loss of funds.

CeDeFi platforms tend to provide users with user-friendly interfaces similar in appearance to the centralized exchanges they are used to.

Another strength of CeDeFi is security. CeDeFi projects protect users from attacks and frauds, such as smart contract hacks and rug pulls*.

* Rugpool or "rug pulling" is a type of fraud in which project organizers raise investor funds and then abruptly disappear with them by deleting their website and social media profiles.

CeDeFi's partial regulation protects users and investors by implementing mechanisms in line with KYC/AML policies. This enables CeDeFi platforms to attract large investors and traders who care about legalization.

Also, unlike DeFi, CeDeFi platforms can support fiat payments, allowing them to be easily converted into cryptocurrencies. In addition to decentralized pools, CeDeFi projects can use their own reserves to increase liquidity in the market.

Despite the above advantages, CeDeFi projects have drawbacks and risks. The first includes limitations that are inherent to CeFi projects and absent in decentralized platforms. Like CeFi projects, CeDeFi platforms can freeze and block users' assets and cancel their transactions. In addition, for example, CeDeFi exchanges can suspend trades and withdrawals from liquidity pools in case of any incidents in the crypto market.

Unlike decentralized projects, CeDeFi marketplaces serve as intermediaries between users and the market — just like centralized exchanges. This means that such projects can charge additional commissions, making financial services more expensive compared to the DeFi marketplace.

In addition, CeDeFi users, like centralized marketplaces, are still not completely immune to personal data leaks and losses from hacker attacks. For example, in February, hackers stole $1.4 billion in assets from ByBit, one of the largest cryptocurrency exchanges, despite the fact that the company kept its assets in a cold wallet.

Finally, CeDeFi projects are run by a team rather than a community, as with decentralized autonomous organizations (DAOs) such as Uniswap, MakerDAO, or Curve DAO.

Examples of CeDeFi-projects

Binance

It is not only the largest exchange in the crypto market but also one of the first to launch its own CeDeFi-ecosystem. Binance has released:

BNB Chain's own partially decentralized network;
Binance DEX decentralized cryptocurrency exchange;
Web3 Binance Wallet;
A bridge between CeFi and DeFi called Binance Bridge;
Binance Liquid Swap, a hybrid liquidity pool partially managed by the company;
Binance NFT marketplace Binance NFT.

ByBit

ByBit, along with Binance, is one of the largest and most liquid crypto exchanges. Following in the footsteps of the leader, ByBit has launched its decentralized hub, which includes Web3 projects such as:

Bybit Web3 Wallet, a non-custodial wallet;
ByBit NFT marketplace;
ByBit Launchpad, a platform for launching new tokens;
ByBit Liquidity Mining pools.

Unizen

A hybrid DeFi platform that combines decentralized and centralized exchanges into one ecosystem to optimize liquidity and trading and uses artificial intelligence (AI) technologies to improve order performance and reduce commissions.

The Unizen ecosystem includes the following applications:

ZenX liquidity aggregator, which analyzes rates on CEX and DEX exchanges and finds trades at the best prices for users;
Proprietary Trade Fusion technology that combines the security of DEX platforms with the speed of CEX venues.

GRVT

A hybrid crypto exchange that combines the features of both CEX and DEX venues. The GRVT team is positioning its exchange as the first regulated platform for trading crypto derivatives such as futures and options.

Nexo

Nexo was originally a centralized lending platform, but over time, it has taken its focus on the DeFi market by adding integration with decentralized protocols. As of April 2025, the Nexo ecosystem includes:

CeFi-enabled Nexo Wallet with support for cryptocurrencies;
Nexo Exchange hybrid trading platform with aggregation of decentralized liquidity pools;
Nexo Pro platform providing services to institutional investors;
Nexo Card is a cryptocurrency card that allows you to pay for goods and services with cryptocurrency.