What is Centralized Finance (CeFi)?

Centralized Finance (CeFi) is often thought of as a bridge between traditional finance (TradFi) and modern financial applications like blockchain and financial technology (FinTech). CeFi enterprises generally operate using a centralized governing body that controls users' funds. Although numerous interpretations of what CeFi encompasses exist, centralized exchanges (CEXs), cryptocurrency asset custodians, and numerous FinTech applications like payment service providers are typically considered to be CeFi. CeFi service providers are often characterized as easy-to-use and heavily regulated with low fees. However, because they are centralized, they are potentially susceptible to a single point of failure.