Definition ∞ On-chain custody refers to the secure management and storage of digital assets directly on a blockchain network, where ownership and control are cryptographically recorded and verifiable. This method often involves smart contracts or multi-signature schemes that dictate how assets can be accessed and transferred. It offers a transparent and auditable record of asset holdings, reducing reliance on centralized third parties for asset safekeeping. Users retain a high degree of control over their assets through their private keys.
Context ∞ The security and operational models of on-chain custody solutions are a constant subject in blockchain security news and institutional discussions. While offering enhanced transparency, the complexity of managing private keys and smart contract risks presents specific challenges. Innovations in self-custody solutions and decentralized custody protocols are gaining prominence, seeking to balance user control with robust security measures for both individual and institutional asset holders.
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