CeDeFi: The transparency offered by decentralized platforms is something CeFi can benefit from adopting. Midas.Investments CEO Lakov Levin says integrating them into his CeDeFi could be the solution.
Despite the prolonged market downturn, cryptocurrency and blockchain adoption continues to grow across the industry. Today, he has over 300 million people owning and using cryptocurrencies around the world. Over 18,000 businesses accept crypto payments for their products and services.
Crypto profitability is considered one of the factors driving mass adoption. Today, users are aware that HODLing coins to her is just one strategy, but not the highest yielding strategy ever. Lend assets, borrow against crypto collateral, stake tokens, and participate in yield farming to grow your digital assets more substantially.
Yields are the core drivers of the crypto economy. It helps users maintain financial stability even during bear markets. However, the current asset management model in yield farming has serious flaws.
To better understand these issues and find solutions, we must first compare the yields of CeFi and DeFi.
CeFi vs DeFi Yield: Pros and Cons
Two types of platforms offer crypto yield services: CeFi (centralized finance) and DeFi (decentralized finance).
Security and flexibility and volatility
As a rule of thumb, CeFi is more secure and reliable, while DeFi offers higher return opportunities with higher risk and volatility.
When betting cryptocurrencies on platforms like CeFi, they are lent to individual borrowers at a fixed rate of repayment. It creates a favorable financial cycle, which in turn contributes to model stability. DeFi platforms, on the other hand, most often use floating rates (non-fixed rates) that change depending on the liquidity pool size or token issuance rate.
Estimated risk
To better understand the risks of DeFi, consider the following scenarios. As a platform grows in popularity, more lenders will flock to it to get higher yields (better rewards). As such, the amount of liquidity in the liquidity pool surges, resulting in a plummeting reward.
This does not occur on CeFi platforms with fixed interest rates. Platforms can keep the latter by sacrificing capital or limiting lenders’ deposit amounts.
Add to that the overall complexity and volatility of DeFi, and it becomes clear why onboarding new users to decentralized finance is more difficult.
Still, certain shortcomings of the current CeFi model present a long deadline for upgrades. We will review them in the paragraphs below.
Centralized financial yields needing a reboot
In the current model, CeFi platforms are forced to spread their capital across different types of assets in order to maintain fixed interest rates. This includes various DeFi protocols, liquid assets (stablecoins), and long-term crypto institution loans (3AC). However, in the event of a black swan event in some of these asset classes, the centralized platform risks losing a large portion of its capital, putting users’ funds and portfolios at risk.
On top of that, there are trust issues. With a centralized platform, you are ultimately outsourcing your assets to a third party who has complete control over them. On DeFi platforms, only you are in control of your private keys and wallet.
In fact, CeFi offers many opportunities for sustainable investment in the cryptocurrency world. Its fixed high interest rate model helps users earn premium yields not possible with her DeFi and help maintain financial stability.
However, the above issues can pose significant risks to your assets. The transparency offered by a decentralized platform is something that CeFi could benefit from adopting. I think the solution is to make the most of these two words and integrate them into CeDeFi.
CeDeFi: Massive Crypto Adoption Through Innovation
Combining CeFi and DeFi models can create a more exciting range for users while minimizing risk.
CeDeFi bridges the gap between centralized and decentralized models. The transparency of the latter allows users to know how their assets are managed and stay informed about the associated risks and rewards.
Midas Investments is a prime example of how this model can deliver exceptional yields. The platform leverages flexible CeDeFi strategies adapted to different market conditions to offer users higher interest rates while maintaining full transparency of investments and risks.
The platform uses DeFi and algorithms as building blocks to keep investment strategies transparent and actionable risk predictions. A CeFi layer sits on top of this foundation, keeping the traditional lending and borrowing model intact.
To better understand this hybrid model, let’s see how Midas effectively uses the CeDeFi strategy.
CeDeFi: Reimagined Investment Strategy
Midas offers a wide range of transparent strategies to achieve premium yields. The first is Single Asset Staking. This strategy allows investors to get higher yields on big capital assets such as her BTC and ETH. These assets could earn up to 12.8% of her APY while the project team manages and controls the risks.
A unique Yield Automated Portfolio (YAP) strategy contains equally weighted groups (or pools) of digital assets. They are similar to ETFs (Exchange Traded Funds) offered on the stock market. By investing in YAP, users can spread their investment across multiple crypto assets, minimizing risk.
CeDeFi’s investment strategy is a hybrid model built for specific market cycles, allowing investors to choose the strategy that most closely matches their investment philosophy. The CeDeFi model acts as a bridge between CeFi and DeFi, enabling account creation and money management for investors participating in DeFi. Each of these strategies boasts attractive ROI while demonstrating resilience through various bullish or bearish market cycles.
CeDeFi: Summary
CeDeFi has the potential to transform the cryptocurrency industry, solve some of the most pressing problems, and facilitate mass adoption of digital assets. A controlled and transparent model allows the platform to generate more sustainable passive income for the cryptocurrency community. Additionally, CeDeFi is attractive to institutional investors due to its security and scalable orientation. It provides a robust solution for bringing more security and control to his range of DeFi products.
Going forward, users who want to earn money in cryptocurrencies will have the opportunity to mitigate risk using CeDefi solutions that generate yield by hedging their DeFi strategies. As a result, CeDeFi is on the rise due to improved accessibility and seamless deployment. As such, investors will have access to opportunities to generate APY by investing in carefully selected products and services that best fit their goals.
About the author
Lakov Levin is CEO of Midas.Investments, a CeDeFi platform for staking core crypto assets and DeFi tokens. Since 2018, Midas.Investments has grown from his Discord server to a bridge between CeFi and DeFi for long-term wealth creation with $200 million in assets under management and his 7,000 active investors.
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