The classification framework of the six Defi protocols is seen from the degree of decentralization
Recently, Kyle J Kistner from bZx divided DeFi into six categories based on the degree of decentralization of each component in the DeFi loan agreement. The degree of decentralization and decentralization in the blockchain industry, such as full concentration, partial component concentration and complete dispersion, has been the direction of exploration and evolution.
CeFi: CeFi products are unmanaged, but use centralized price supply, centralized approval margin, centralized fixed interest rate, and centralized approval margin and liquidity. Examples include SALT, BlockFi, Nexo, and Celsius.
DeFi level 1: these DeFi products are unmanaged, but use centralized price supply, centralized approval margin, centralized provision of liquidity, centralized fixed interest rate, and centralized approach to promote the development and update of management platform. Examples include Dharma.
CeFi: CeFi products are unmanaged, but use centralized price supply, centralized approval margin, centralized fixed interest rate, and centralized approval margin and liquidity. Examples include SALT, BlockFi, Nexo, and Celsius. DeFi level 1: these DeFi products are unmanaged, but use centralized price supply, centralized approval margin, centralized provision of liquidity, centralized fixed interest rate, and centralized approach to promote the development and update of management platform. Examples include Dharma.
Level 2 DeFi: these DeFi products are unmanaged and have an additional decentralized component that may include price provisioning, margin calls, margin liquidity, rate fixing or platform development updates, while the rest remain centralized. Like Expo, Nuo and ETHLend.
DeFi level 3: these DeFi products are unmanaged without margin calls, while centrally managed price supply, centrally managed interest rates, and centrally controlled platform development and update. Things like Compound, MakerDAO
DeFi at level 4: these DeFi products are unmanaged, no margin calls are required, margin call liquidity is provided without authorization, price supply is decentralized, but interest rates are set centrally and platform development and update is controlled centrally. Examples include Fulcrum and dYdX.
DeFi, level 5: these DeFi products are unmanaged, no margin calls are required, margin call liquidity is provided without authorization, decentralized price supply, decentralized interest rates are determined, but centralized approach controls platform development and update. Examples include bZx.
Level 6 DeFi: each component in these DeFi protocols, including development, is decentralized. There are no examples, because no DeFi protocol is completely fragmented.
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