Definition ∞ Self-custodial finance describes financial activities where individuals maintain direct and exclusive control over their digital assets, rather than relying on third-party custodians. Users hold their private keys, enabling them to manage funds, execute transactions, and interact with decentralized protocols independently. This approach emphasizes individual sovereignty and eliminates intermediary risk.
Context ∞ Self-custodial finance is a core principle of the decentralized digital asset ecosystem, offering users autonomy over their holdings. While providing significant benefits in terms of control and censorship resistance, it also places full responsibility for security and key management on the individual. The ongoing development of user-friendly self-custody solutions and educational resources is crucial for broader adoption and risk mitigation.
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