The decentralized finance (DeFi) industry is undeniably reshaping the way financial transactions are conducted. However, there is still much to learn from the more established centralized finance (CeFi) sector. Let’s explore the vital aspects DeFi can grasp from the CeFi system and how striking the right balance between the two can lead to success.
Trust is the primary factor that businesses must earn among their users. Centralized finance companies have already established a level of trust, which has been fractured in part due to recent crypto developments. Although DeFi is designed to eliminate some CeFi flaws, assuming user trust from the beginning is not the approach DeFi companies should adopt. Trust must be earned and maintained conscientiously.
CeFi has excelled in promoting user experience (UX) and user interface (UI) design, which is an aspect that DeFi platforms should prioritize. By focusing on developing easy-to-use platforms with simple interfaces, DeFi companies can attract and retain users, like their CeFi counterparts.
Standardization, simplicity, and education can transform the DeFi industry. By incorporating standardized procedures and making information more accessible, the sector can increase understanding and attract new users. Additionally, complying with regulations, like Know Your Customer (KYC), will likely become mandatory in the future.
Accountability plays a critical role in finance. CeFi companies often appoint strong CFOs and regulatory compliance teams to ensure the proper handling of financial transactions. In comparison, DeFi companies can place too much emphasis on technology and marketing, leading to potential hazards in the absence of appropriate checks and balances.
Customer support is another area where DeFi platforms can learn from CeFi companies. By providing accessible educational materials and assistance for newcomers, DeFi platforms can improve their user experience and attract more users.
While scaling is essential for growing a business, it must be carried out carefully, with a strategic plan to support it. Both CeFi and DeFi companies have witnessed issues with improper scaling, which can significantly damage their reputation.
Offering a variety of service levels is necessary to appeal to a broader spectrum of users. DeFi companies can bridge the gap with CeFi by presenting a smoother investing process for everyday users while still catering to expert investors with advanced tools.
Finally, cybersecurity should always remain a top priority in the industry. DeFi companies must learn the importance of strong security measures to reduce the risks of hacks and other breaches. By implementing robust authentication protocols, code reviews, research, and bug bounty programs, DeFi platforms can enhance their security systems.
DeFi may be breaking new ground in the finance world, but it is crucial to recognize the valuable lessons that can be learned from the CeFi sector. By incorporating these aspects into DeFi platforms, they can provide a seamless, secure, and trustworthy experience for users, further propelling their success in the financial landscape.
Source: Cointelegraph
