Non-Custodial Trading

Definition ∞ Non-custodial trading permits users to exchange digital assets without relinquishing control of their private keys. This method utilizes decentralized exchanges (DEXs) or peer-to-peer protocols, where transactions occur directly between participants’ wallets via smart contracts. Users maintain full sovereignty over their funds throughout the trading process, reducing counterparty risk associated with centralized intermediaries. It represents a core tenet of decentralization within the digital asset market.
Context ∞ The discussion surrounding non-custodial trading in crypto often focuses on its enhanced security and censorship resistance compared to centralized exchanges. A key debate involves improving the liquidity and user experience of decentralized platforms to rival their centralized counterparts. Future developments will likely include advancements in layer-2 scaling solutions, improved cross-chain functionality, and more intuitive user interfaces for DEXs.