CeFi vs DeFi for Passive Income in 2025
Should you trust centralised platforms like Nexo or decentralised protocols like Aave? This guide compares both options to help you earn more safely.
What’s the Difference Between CeFi and DeFi?
CeFi (Centralised Finance) uses custodial platforms like Binance, Nexo, or Coinbase, where companies control your funds. DeFi (Decentralised Finance) utilises on-chain protocols like Aave or Lido, eliminating intermediaries.
Yield Comparison
- CeFi: Often higher stablecoin APY, but rate caps and internal risks.
- DeFi: More volatile but flexible; rates change based on supply/demand.
Risk & Custody
- CeFi: You trust a company. Risks: fraud, policy changes, and lockouts.
- DeFi: Smart contract bugs, governance flaws, but self-custody.
User Experience
CeFi is easier for beginners, with apps, fiat onramps, and support. DeFi needs wallets, chains, and UX skills, but offers full control.
Top CeFi and DeFi Platforms in 2025
- CeFi: Nexo, Binance Earn, Coinbase
- DeFi: Aave, Lido, Rocket Pool, Pendle
CeFi vs DeFi: Full Comparison
| Aspect | CeFi | DeFi |
|---|---|---|
| Control | Platform holds funds | You hold keys |
| Risk | Custodial, policy | Smart contracts |
| Yields | Stable but capped | Variable, uncapped |
| UX | Beginner-friendly | Advanced |
| Transparency | Low | High |
Frequently Asked Questions
Which is safer: CeFi or DeFi?
CeFi feels safer but has counterparty risk. DeFi gives you control, but smart contracts can be exploited.
Which earns more: CeFi or DeFi?
Depends on the market. CeFi often offers stable returns, while DeFi may provide a higher yield with increased risk.
Can I use both?
Yes. Many diversify between CeFi for simplicity and DeFi for opportunities. Just manage your exposure.