Security Concerns Still Compel HODLers To Prefer Centralized Exchanges Over Decentralized Finance

In recent years, a great adoption rate has been recorded by the on-chain data analyzing firms related to decentralized finance (DeFi).

As per data, the adoption rate for DeFi has continued rising on an overall scale. Still, investors prefer sticking with centralized exchanges (CEXs).

The study has shown that the DeFi tools currently have less attraction and demand versus centralized exchanges.

Cryptocurrency Investors Feel Comfy with CEXs

Despite the growing adoption rate for DeFi, it is the centralized exchanges that are providing a highly secure platform to crypto investors.

According to the latest research, investors still consider centralized exchanges to be sec—4\urer and more protected than the DeFi protocols.

As per the study, the investors still consider DeFi platforms to be highly vulnerable and they have strong chances of getting targeted by hackers.

The research about the preference of the investors in CEXs compared to the DeFi platforms was carried out by two major firms. It was reportedly the combined effort of Bitfinex and Chainalysis that was issued on October 13.

Comparison between CEXs and DeFi Platforms

According to the data collected by both firms, the cases involving the hacking of centralized exchanges have dropped significantly in recent years.

On the other hand, the number of hack attacks and threats involving decentralized finance platforms has increased tremendously.

Over the past couple of years, several decentralized finance protocols have been hacked by hackers. Several billions of dollars worth of cryptocurrencies and digital assets have been lost to the hacks.

Unfortunately, the decentralized nature of the platforms makes it impossible to track down such hackers and bring them to justice.

Funds Stolen from Centralized and Decentralized Platforms

According to the statistics, the funds stolen by hackers from the centralized platforms in the year 2018 were at their peak. In this particular year, the peak funds stolen were $972 million.

However, in the year 2021, the funds stolen from the centralized platforms were worth $413 million. The data has been collected and shared by Chainalysis.

Even in the running year, the number of funds stolen by hackers from the centralized platforms is just $80 million. It makes it clear that centralized platforms have continued getting more protected over the years.

On the other hand, the funds stolen in the year 2022 so far from the decentralized finance platforms have reached $2.2 billion.

As the level of thefts has continued dropping in the centralized industry, more investors have started moving to the particular sector.

If the decentralized finance industry, which accounts for almost 95% of the total crypto industry, does not introduce stricter rules and more safety, things could go even south.