Definition ∞ CeFi lending refers to the practice of borrowing and lending digital assets through centralized financial institutions. These platforms act as intermediaries, managing user funds and facilitating loan agreements. Users deposit assets with the expectation of earning interest, while borrowers provide collateral to access liquidity.
Context ∞ CeFi lending platforms are regularly featured in crypto news due to their significant role in providing yield-generating opportunities and liquidity to the market. Their operations, however, are subject to increasing regulatory scrutiny concerning consumer protection and risk management. The distinction between CeFi and DeFi lending remains a critical point of discussion in the evolving digital asset space.
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