13 DEFI LEADING PRACTICES CEFI COMPANIES WOULD BE WISE TO EMULATE

Last updated: June 19, 2025, 18:40 | Written by: Tyler Winklevoss

The financial landscape is rapidly evolving, with Decentralized Finance (DeFi) emerging as a significant force.While Centralized Finance (CeFi) has long been the traditional backbone of the financial system, it cannot afford to ignore the innovations and user preferences driving the DeFi revolution.CeFi institutions, to avoid a slow slide into irrelevance and better cater to their current and future users, need to understand and adopt successful strategies from the DeFi world. BTCUSD Bitcoin 13 DeFi leading practices CeFi companies would be wise to emulate To better meet the changing needs and demands of users, CeFi companies should take a close look at what makes DeFiThis isn't about a complete overhaul, but rather a strategic integration of DeFi's strengths to enhance CeFi's existing framework.Think of it as CeFi evolving into CeFi+, enhanced by the best of DeFi.Customers are increasingly drawn to the empowerment, transparency, and global reach that DeFi offers. While there are inherent strengths to be found in both centralized finance and decentralized finance companies, there are certain areas in which DeFi shines, Facebook Twitter Youtube HomeBy learning from these decentralized models, CeFi companies can adapt to changing demands, fostering greater trust and engagement.This article explores 13 leading DeFi practices that CeFi companies should seriously consider emulating to remain competitive and relevant in this new era of finance.These practices range from user empowerment and transparency to fostering community and embracing cutting-edge technology.

Embracing Transparency and Immutability

One of the core tenets of DeFi is its inherent transparency.All transactions and smart contract code are publicly available on the blockchain, fostering a high degree of accountability and trust. 13 DeFi leading practices CeFi companies would be wise to emulate. byCeFi, traditionally opaque, can significantly benefit from increased transparency.

Open Audit Trails: Implementing more transparent reporting mechanisms, allowing users to track the flow of their funds and the operational activities of the platform.
Publicly Verifiable Data: Making key performance indicators (KPIs) and relevant data publicly accessible and verifiable.
Clear and Concise Communication: Providing clear and understandable explanations of fees, risks, and terms of service.

Unlike CeFi, where rules and regulations can be changed by a trusted intermediary, DeFi rules are immutably inscribed on the blockchain.While complete immutability may not be feasible or desirable for CeFi due to regulatory requirements, exploring ways to increase the auditability and permanence of key decisions can enhance user confidence.

Prioritizing User Empowerment and Control

DeFi puts users in the driver's seat. While DeFi may be the wave of the future, the industry can still learn smart practices from leading CeFi companies. Pioneers and insiders of the decentralized finance industry strongly believe they are the vanguard of a new and better way to handle financial transactions. Still, it doesn t mean they have nothing to learn from centralized [ ]They have direct control over their assets and can participate in governance decisions.CeFi can empower users by giving them more agency over their accounts and financial decisions.

Self-Custody Options: Offering users the option to self-custody their digital assets, even if they choose to use the CeFi platform for trading or other services.
Granular Permissions: Allowing users to customize the permissions granted to the platform, such as limiting access to specific functionalities or data.
Direct Governance Participation: Incorporating mechanisms for users to participate in the platform's governance, such as voting on proposed changes or improvements.

This shift in control fosters a sense of ownership and loyalty, strengthening the relationship between the CeFi platform and its users.

Fostering Community and Collaboration

DeFi thrives on community. To avoid a slow slide into irrelevance and to better serve their current users DeFi companies should take a look at the aspects of CeFi consumers find most appealing. Below, 13 members of Cointelegraph Innovation Circle share a few of the leading DeFi practices CeFi companies would be wise to emulate. Don t play favoritesProjects are often built and maintained by a decentralized network of developers, users, and enthusiasts.CeFi companies can create stronger communities by fostering open communication and collaboration.

Active Community Forums: Establishing and actively moderating online forums where users can discuss the platform, ask questions, and provide feedback.
Developer Programs: Creating programs to encourage developers to build on the platform, contributing to its growth and innovation.
Open Source Contributions: Contributing to open-source projects in the blockchain space, demonstrating a commitment to the broader ecosystem.

By actively engaging with their community, CeFi companies can gain valuable insights, build trust, and foster a sense of shared ownership.

Embracing Composability and Interoperability

DeFi protocols are designed to be composable, meaning they can be easily integrated with other protocols.This interoperability unlocks new possibilities and allows users to create complex financial strategies.CeFi companies can benefit from embracing similar principles.

Open APIs: Providing open APIs that allow other platforms and applications to integrate with their services.
Cross-Chain Compatibility: Supporting multiple blockchains and allowing users to seamlessly transfer assets between different chains.
Collaboration with Other Platforms: Partnering with other CeFi and DeFi platforms to offer a wider range of services and functionalities.

By embracing composability and interoperability, CeFi companies can create a more interconnected and user-friendly financial ecosystem.

Automating Processes with Smart Contracts

Smart contracts are self-executing agreements written in code that automatically enforce the terms of a contract.DeFi heavily relies on smart contracts to automate processes and eliminate the need for intermediaries. 13 DeFi leading practices CeFi companies would be wise to emulateSource: CointelegraphPublished onCeFi can leverage smart contracts to streamline operations and reduce costs.

Automated Escrow Services: Using smart contracts to automate escrow services for transactions, reducing the risk of fraud and disputes.
Automated Loan Repayments: Automating loan repayments through smart contracts, ensuring timely payments and reducing the need for manual intervention.
Automated Compliance Checks: Integrating smart contracts with compliance systems to automate KYC/AML checks, reducing the risk of regulatory violations.

By automating processes with smart contracts, CeFi companies can improve efficiency, reduce costs, and enhance security.

Yield Farming and Staking Opportunities

DeFi offers various yield farming and staking opportunities that allow users to earn rewards for providing liquidity or staking their tokens. Altszn.com provides the latest news, resources and insights on Bitcoin, Ethereum, Solana, DeFi, Web3, NFTs and other cryptocurrency markets.CeFi can attract users by offering similar opportunities.

Liquidity Pools: Creating liquidity pools where users can deposit their assets and earn rewards based on trading fees.
Staking Programs: Offering staking programs where users can stake their tokens and earn rewards for securing the network.
Interest-Bearing Accounts: Providing interest-bearing accounts that offer competitive yields on digital assets.

These opportunities can incentivize users to hold their assets on the CeFi platform and participate in the ecosystem.

Decentralized Governance and Voting Mechanisms

Many DeFi projects utilize decentralized governance mechanisms, allowing token holders to vote on important decisions regarding the protocol.CeFi can explore similar models to empower users and foster a sense of ownership.

Token-Based Voting: Implementing a token-based voting system where users can vote on proposed changes to the platform.
Community Proposals: Allowing users to submit proposals for improvements or new features.
Transparent Decision-Making Processes: Making the decision-making process transparent and accessible to all users.

This fosters a more democratic and inclusive environment, attracting users who value transparency and participation.

Permissionless Innovation and Open Source Development

DeFi's permissionless nature allows anyone to build on existing protocols and create new applications.CeFi can foster innovation by supporting open-source development and encouraging developers to build on their platforms.

Open Source Software: Open-sourcing parts of their codebase to encourage community contributions.
Hackathons and Bounties: Hosting hackathons and offering bounties for developers who find and fix bugs or build new features.
Developer Grants: Providing grants to developers who are working on innovative projects that benefit the ecosystem.

This approach can accelerate innovation and attract talented developers to the CeFi platform.

Data-Driven Decision Making and Analytics

The transparency of blockchains provides a wealth of data that can be used to make informed decisions.CeFi companies can leverage on-chain data and analytics to improve their services and better understand their users.

Transaction Analysis: Analyzing transaction data to identify trends, patterns, and potential risks.
User Behavior Analysis: Analyzing user behavior to understand their needs and preferences.
Risk Management: Using data analytics to identify and mitigate risks.

By leveraging data analytics, CeFi companies can make more informed decisions and optimize their operations.

Composable Financial Products

DeFi enables the creation of complex financial products by combining different protocols and services. I'm excited to be featured on Cointelegraph and share my knowledge on the latest article: 13 DeFi Leading Practices CeFi Companies Would be Wise to Emulate . In the article, I share valuableCeFi can offer similar composable products that cater to the diverse needs of their users.

Bundled Services: Offering bundled services that combine different financial products, such as lending, borrowing, and trading.
Customizable Investment Strategies: Allowing users to customize their investment strategies by combining different assets and protocols.
Automated Portfolio Management: Providing automated portfolio management services that automatically rebalance portfolios based on market conditions.

These composable financial products can provide users with greater flexibility and control over their investments.

Direct Access to Global Markets

DeFi offers users direct access to global markets, regardless of their location or financial status. While there are inherent strengths to be found in both centralized finance and decentralized finance companies, there are certain areas in which DeFi shines, including user empowerment, transparency and reach. While customers may be drawn to CeFi s perceived security and strength advantages, in anCeFi can expand its reach by providing similar access to a broader range of users.

Cross-Border Payments: Facilitating cross-border payments using blockchain technology, reducing fees and transaction times.
Global Trading Platforms: Offering global trading platforms that allow users to trade assets from anywhere in the world.
Decentralized Lending and Borrowing: Providing decentralized lending and borrowing services that connect borrowers and lenders from around the globe.

This can significantly expand the user base and market reach of CeFi companies.

Enhanced Security Through Decentralization

While CeFi often touts security advantages, DeFi, by its very nature, distributes risk across a network.CeFi can enhance its security by incorporating decentralized elements.

Decentralized Key Management: Implementing decentralized key management systems to protect user assets.
Multi-Signature Wallets: Using multi-signature wallets that require multiple approvals for transactions.
Decentralized Oracles: Utilizing decentralized oracles to provide reliable and tamper-proof data to smart contracts.

These measures can enhance the security and resilience of CeFi platforms.

Don't Play Favorites: Offer Neutral Access

A key principle in DeFi is neutrality – platforms shouldn't prioritize or favor certain actors or assets over others.CeFi institutions, often perceived as playing favorites, can build trust by ensuring fair and equal access for all users.

Listing Criteria Transparency: Clearly defining and publicly stating the criteria for listing new assets or supporting new protocols.
Algorithmic Fairness: Implementing algorithms that ensure fair order matching and price discovery, avoiding front-running or other unfair practices.
Equal Access to Services: Ensuring all users have equal access to services, regardless of their size or influence.

This neutrality fosters a level playing field and builds trust with the community.

Conclusion: The Future of Finance is Hybrid

The future of finance likely lies in a hybrid model that combines the strengths of both CeFi and DeFi.CeFi companies that are willing to embrace the leading practices of DeFi can position themselves for success in this new era. BTCUSD Bitcoin 13 DeFi leading practices CeFi companies would be wise to emulate To better meet the changing needs and demands of users, CeFi companies should take a close look at what makes DeFi companies appealing.By prioritizing user empowerment, transparency, and innovation, CeFi can adapt to the evolving needs and demands of users, build stronger communities, and create a more inclusive and accessible financial system.The key takeaways are clear: increased transparency builds trust, user empowerment fosters loyalty, and embracing innovation drives growth. 13 DeFi leading practices CeFi companies would be wise to emulateFailing to adapt risks becoming irrelevant in a rapidly changing landscape.The time to learn and emulate is now. To better meet the changing needs and demands of users, CeFi companies should take a close look at what makes DeFi companies appealing. While there are inherent strengths to be found in both centralized finance and decentralized finance companies, there are certain areas in which DeFi shines, including user empowerment, transparency and reach. While customers may be drawn to CeFi s perceivedExplore the possibilities, experiment with new models, and ultimately, build a better financial future.