🤷‍♂️Why DeFi Is Important

DeFi platforms stand apart from their centralized counterparts through their reliance on autonomous, open-source smart contracts. These contracts are transparent, allowing anyone to inspect and verify their inner workings.

Unlike centralized platforms where developers might misappropriate funds, DeFi developers cannot easily divert customer assets without significant oversight or manipulation, such as using their holdings to influence community votes. While developers can update smart contracts, this usually involves publishing proposals and seeking community approval. For the most part, DeFi platforms operate automatically based on their code.

Though not entirely foolproof, DeFi offers superior transparency and fairness compared to centralized finance, giving users greater control and a more inclusive environment for managing their assets.

In contrast to centralized exchanges (CEXs) that hold users' funds, DeFi platforms cannot unilaterally access or use your assets. The saying "Not your keys, not your coins" is particularly relevant in light of incidents like the FTX collapse, underscoring the importance of maintaining control over your own assets, even when trading actively.

Additionally, many centralized exchanges (CEXs) have included in their user agreements that customers' digital assets may not be protected in bankruptcy situations. They often specify that custodially held crypto assets might be regarded as part of the bankruptcy estate, leaving users as general unsecured creditors. In some cases, a CEX might even mistakenly transfer large sums of cryptocurrency to the wrong address, resulting in significant financial losses.