How does permissioned DeFi differ from traditional decentralized finance in the context of cryptocurrencies?

3 answers

• Dec 18, 2021 · 3 years ago
  Permissioned DeFi and traditional decentralized finance differ in terms of their accessibility and control. Permissioned DeFi platforms require users to obtain permission or be approved by a central authority before participating in the network. This central authority has the power to grant or deny access to users. On the other hand, traditional decentralized finance platforms are open to anyone with an internet connection and do not require permission from a central authority. Users have full control over their funds and can participate in the network without any restrictions. In terms of cryptocurrencies, permissioned DeFi may use specific cryptocurrencies or tokens that are approved by the central authority, while traditional decentralized finance platforms are often open to a wide range of cryptocurrencies.
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• Dec 18, 2021 · 3 years ago
  Permissioned DeFi and traditional decentralized finance have different levels of decentralization. Permissioned DeFi platforms often have a higher level of centralization due to the involvement of a central authority that controls access and makes decisions. This central authority can have the power to modify or reverse transactions, freeze accounts, or impose restrictions. In contrast, traditional decentralized finance platforms aim for a higher level of decentralization, where decision-making power is distributed among the network participants. Transactions are typically irreversible, and users have more control over their funds. This decentralized nature provides greater transparency and security.
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• Dec 18, 2021 · 3 years ago
  In the context of cryptocurrencies, permissioned DeFi may be associated with specific centralized exchanges or platforms that require users to go through a KYC (Know Your Customer) process and adhere to regulatory requirements. These platforms often have stricter rules and may limit access to certain jurisdictions. On the other hand, traditional decentralized finance platforms are more open and accessible to users worldwide, regardless of their location or identity. They provide a more inclusive and borderless financial system. However, it's important to note that both permissioned DeFi and traditional decentralized finance have their own advantages and use cases. The choice between them depends on individual preferences and requirements.
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