CeFi (Centralized Finance) and DeFi (Decentralized Finance) are financial systems operating with traditional fiat money and cryptocurrency. They are different in their essence and operations, marketing, and interactions with their audiences.
The Difference Between CeFi and DeFi Systems
Centralized Finance products are financial products and services that are offered by centralized financial institutions or platforms.
These products and services are designed to offer users a familiar and centralized experience with a range of features and functionalities that are not yet available in the decentralized finance (DeFi) space.
CeFi refers to traditional economic systems that are centralized and operate through a single entity, such as a bank, brokerage firm, or centralized crypto exchange. Stripe, Revolut, PayPal, Binance, and Kraken are examples of the CeFi system.
DeFi refers to decentralized financial systems that operate on blockchain technology and do not rely on a single centralized entity. DeFi is a rapidly growing space that offers decentralized financial products and services using blockchain technology.
Marketing DeFi products can be challenging as they are relatively new and often more complex than traditional financial products. Examples of DeFi are MakerDAO, Aave, dYdX, PancakeSwap, and Uniswap.
The main difference in the marketing approach between CeFi and DeFi is the emphasis on decentralization and trust.
Decentralized systems are susceptible to the Byzantine Generals Problem, as they lack a dependable source of information and have no way of confirming the information they get from other network users.
In centralized systems, an authority is trusted to disseminate accurate information while preventing the spread of erroneous or fraudulent information across the network.
Banks are trusted in the traditional financial system to provide clients with accurate balances and transaction histories. The central bank or government is authorized to restore faith if a bank tries to deceive or mislead its consumers.
Marketing of the CeFi products
There are differences between marketing efforts, money spent, the target audience, and the channels used.
In marketing, CeFi products focus on convenience, stability, and reliability. Centralized institutions offer CeFi products, and marketing efforts may focus on the trust and security of using a well-established financial institution.
This can be particularly appealing to investors who are wary of the relatively new and untested nature of DeFi products.
CeFi products may be marketed as more user-friendly than DeFi products, particularly for users who are less familiar with blockchain. Marketing efforts may emphasize the ease of use of these products and how they can be integrated into people’s financial lives.
Here you can see an example of brand promise from indó iceland bank:
CeFi marketing is more geared toward a mainstream audience, spending money to direct advertising:
- banners on websites
- buying traffic
- targeted advertising on social media
- influence marketing
- offline print advertising
For example, Santander bank became Ferrari’s Premium Partner.
They say, global sponsorships raise awareness and provide strong international brand visibility, together with strength and robustness worldwide, while local sponsorships enable us to connect with customers in a physical and emotional way in each country.
In the next two images, you can see a comparison of the use of paid advertising by CeFi company Binance and DeFi company Uniswap:
As you can see, the crypto exchange uses paid banner advertising and paid keywords in its marketing. Of course, the Binance marketing team uses many other paid promotion tools, but this is the most obvious and the one that is easy to compare using open data.
Here you can see Uniswap traffic data. Compared to Binance, this product uses much less paid advertising. Read below on how to market DeFi products.
Marketing of the CeFi products requires a focus on trust, traditional investment opportunities, ease of use, and competitive fees and rates. By emphasizing these key benefits, financial institutions can appeal to a wide range of investors and compete in a crowded market.
If you have a big budget, you run this market. If not, my condolences. I know many companies with poor service and products can buy a lot of advertising and anyway get their piece of the pie.
Marketing of the DeFi Products
In contrast with CeFi, DeFi marketing may highlight the benefits of decentralization, such as increased security, transparency, and accessibility.
DeFi marketing emphasizes the innovative and forward-thinking nature of decentralized finance, as it represents a departure from traditional financial systems and has the potential to disrupt and transform the financial industry.
DeFi marketing focuses on early adopters and crypto enthusiasts, using online channels, such as social media, forums, and blogs like HackerNoon, Reddit, and Mirror, to reach its target audience.
Here is an example of Uniswap’s profile on Reddit. Their community is in the top 5%, and it’s really cool.
Social media is a powerful tool for marketing DeFi products, and projects can leverage influencers and thought leaders in the space to help spread the word and generate buzz around their products.
Marketers in DeFi spend a lot of time and effort to build a strong community by:
- conducting hackathons and meetups
- AMA sessions on Twitter or YouTube
- running community chats on Discord and Telegram
AMA is an acronym for “Ask Me Anything.” During an AMA, community members ask questions live and have a dialogue with the host or other participants on enablement topics such as using products, onboarding, tips & tricks, etc.
Here is the announcement of the AMA session by 3HOUSE on Twitter:
Here is an example of the Celo blockchain project account with big number of subscribers on Twitter:
DeFi projects can offer incentives and rewards such as token airdrops, staking rewards, and liquidity mining rewards to attract users and incentivize them to use their products.
DeFi is not simple yet for understanding the main mass of users. Effective marketing of products should include educational content such as blog posts, videos, and tutorials that help users understand the products and how to use them.
For example, Alchemy created their University for people who want to master web3 professions:
Marketing DeFi products requires a focus on education, decentralization, benefits, social media, and incentives. By emphasizing these key strategies, DeFi companies and projects can effectively market their products and grow their user base.
Also, product PR from the technical side and personal brands of founders give additional value.
When marketing CeFi and DeFi, it’s essential to understand the unique advantages of each model and tailor your messaging accordingly.
Whether emphasizing security and ease of use for CeFi or decentralization and transparency for DeFi, make sure to communicate the benefits of your platform to your target audience.