Clear DefinitionsNon‑Custodial Service
1 min read
Pronunciation
[non-kuh-stoh-dee-uhl sur-vis]
Analogy
A non‑custodial service is like a payment gateway that processes transactions but never holds your funds—it only facilitates the exchange.
Definition
A platform that facilitates crypto transactions or services (swaps, staking) without ever holding users’ private keys, integrating with users’ own wallets via APIs or smart contracts.
Key Points Intro
Non‑custodial services maintain security by:
Key Points
Wallet integration: Connects to user wallets via APIs (WalletConnect).
No key storage: Service never sees or stores private keys.
Smart contract execution: Operations occur on‑chain under user control.
Permissionless: Users retain control and privacy.
Example
Uniswap is a non‑custodial exchange: users swap tokens directly from their wallets without depositing funds to the platform.
Technical Deep Dive
Non‑custodial services deploy smart contracts (e.g., AMMs, lending pools). Users sign transactions in their wallets to interact. Service provides front‑end UI and reads blockchain data via nodes, but never handles key material.
Security Warning
Smart contract vulnerabilities can result in loss of funds; ensure service contracts are audited.
Caveat
User bears all risk of smart contract bugs; use audited, well‑tested protocols.
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