Centralised systems typically benefit from increased efficiency by virtue of being legacy systems, with decades of improvements and its relentless drive towards profit maximisation, leading to minimised resource wastage via stringent optimisation. Furthermore, centralised architectures with its top-down style of management tends to be more agile, while its status as an established institution means that a greater number of financial solutions can and have been built on top of it. Consumer protection is established through governing dispute resolution structures and the formal judicial process.
However, the primary drawback is the centralisation of risks and the lack of transparency, creating a single point-of-failure for the entire system. In addition to this, many traditional banks have low interest rates which are too miniscule to even match contemporary rates of yearly inflation, let alone generate profit.
In comparison, decentralised systems are much more transparent in nature while often encouraging community and ecosystem participation since users are considered stakeholders, which ensures that the direction of the platform is always aligned with their individual interests.
As a trade off, decentralised systems tend to be less flexible in nature due to the need for consensus across different stakeholders and have a reduced scope of use cases. The relative youth of decentralised technologies create an added layer of challenges as technical limitations could result in long term issues with regards to scaling the platform.
However, there is a way to integrate the best features of centralised finance with those of DeFi. This is where Centaur has stepped in to plug this gap, by focusing on hybridised solutions that leverages on the efficiency and applicability of centralised architectures and combines them with the transparency and ecosystem participation of decentralised systems. Nevertheless, decentralisation remains a central ethos for Centaur and, as the protocol matures, Centaur will shift towards a truly and fully decentralised model.