Non-custodial assets are digital assets where the owner retains sole control over their private keys and funds. This means that no third party, such as an exchange or financial institution, holds or manages the user’s assets on their behalf. The user is directly responsible for the security and management of their private keys, which grant access to their cryptocurrencies. This approach embodies the core principle of self-sovereignty inherent in decentralized finance.
Context
Non-custodial assets are central to the ethos of decentralization, offering users complete autonomy over their digital wealth, but also placing the full burden of security on them. The rise of decentralized finance applications heavily relies on users managing their non-custodial assets through personal wallets. Discussions frequently address the trade-offs between user control and the potential risks associated with lost keys or security breaches. Educational initiatives and improved wallet interfaces are crucial for promoting safe self-custody practices.
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