Non Custodial Yield

Definition ∞ Non-custodial yield refers to earnings generated from digital assets where the owner maintains complete control over their private keys. This contrasts with custodial services where a third party manages the assets. Users can generate yield through various decentralized finance protocols, such as lending platforms or liquidity pools, without relinquishing ownership. It emphasizes user sovereignty and direct asset management.
Context ∞ The security risks associated with smart contract vulnerabilities in non-custodial yield protocols remain a critical concern, despite the benefit of retaining asset control. Debates often weigh the potential for higher returns against the technical expertise required and the risks of impermanent loss. Future innovations focus on developing more user-friendly and thoroughly audited decentralized finance applications.