What is the difference between CeFi and DeFi lending?

CeFi lending is custodial and managed by a company; DeFi lending is non-custodial and runs on smart contracts.

Which is safer in 2025?

Both have risks. CeFi carries counterparty risk; DeFi carries smart-contract and oracle risks. Diversify and size positions prudently.

How do yields compare?

DeFi yields are typically more variable and strategy-dependent, while CeFi yields are advertised but depend on the provider’s risk model.

CeFi vs DeFi Lending in 2025

Both CeFi (Centralised Finance) and DeFi (Decentralised Finance) offer lending and borrowing services — but with different trade-offs in custody, yields, and risks. Here’s a side-by-side comparison for 2025.

Comparison Table

Aspect	CeFi Lending	DeFi Lending
Custody	Assets held by the platform (Nexo, YouHodler)	Assets remain in your wallet; managed by smart contracts (Aave, MakerDAO/Sky)
Yields	Advertised ~6–12% APY, may include promos	Variable ~2–8% APY, based on supply/demand and collateral
Access	KYC required, regional restrictions	Open globally, no KYC
Risks	Custodial risk, solvency issues	Smart contract exploits, liquidation cascades, oracle failures
User Experience	Mobile apps, fiat ramps, credit cards	Dapps, wallets, gas fees (cheaper on L2)

When to Use CeFi Lending

Use CeFi if you prefer simplicity, mobile-first UX, and fiat on/off ramps. Platforms like Nexo and YouHodler are user-friendly but introduce custodial risk.

When to Use DeFi Lending

Use DeFi if you value transparency, sovereignty, and global access. Aave and MakerDAO’s Sky let you lend/borrow directly through smart contracts with no intermediaries.

Our Verdict

CeFi lending is best for newcomers who need ease of use, while DeFi lending gives advanced users more control and transparency. A balanced portfolio may include both for diversification.