The early opinion of businesses in the traditional finance space towards Decentralized Finance (DeFi) was doubt and hesitation. The novel technology was questioned for its credibility owing to the lack of a central authority.
However, this changed when the world witnessed the collapse of FTX as the opinions of both users and business owners transformed. DeFi appeared as an interesting option since it removed the factor of human error in many ways but also challenged the norms of traditional banking systems.
Since DeFi utilizes blockchain technology to offer financial services in a decentralized fashion, it removes the necessity for intermediaries such as banks. Not only this, but it also enhances transparency and security using cryptographic protocols. Since all records on the public ledger are immutable, the risk of fraud and manipulation is removed.
This sentiment also extended to users who opted for non-custodial or self-custodial wallets over custodial.
Custodial vs Non-Custodial (Self-Custodial) Wallets
In custodial setups, a third party holds and manages assets on behalf of the owner. This third party assumes responsibility for the security and management of the assets.
However, in the case of non-custodial setups, individuals retain direct control over their assets. This is enabled through the use of blockchain and smart contracts prioritizing user autonomy.
Crypto investors tend to opt for this alternative to custodial wallets since non-custodial wallets offer several benefits that align with the ethos of decentralization and user empowerment. These wallets offer users complete control over their funds, eliminating the need to trust third-party custodians and thus reducing the risk of theft or loss due to hacking or insolvency. Additionally, non-custodial wallets enhance privacy and security by not requiring users to disclose personal information or undergo identity verification processes, preserving their anonymity. These wallets also typically employ robust encryption and cryptographic techniques to safeguard funds and transactions, further bolstering security measures.
Moreover, non-custodial wallets contribute to the resilience and censorship resistance of the cryptocurrency ecosystem. By decentralizing control and eliminating single points of failure, they mitigate the risk of censorship or interference from governments or regulatory authorities.
Additionally, these wallets promote interoperability and compatibility with various blockchain networks and decentralized applications (DApps). Users can seamlessly access and manage a wide range of digital assets without being restricted to a specific platform or service provider.
But, along with the benefits of non-custodial setups come challenges.
These include the complexity of setup and users' requirement to stay updated on security practices, which can be daunting for those new to blockchain technology and cryptocurrencies.
These problems are addressed and handled by platforms such as Dyor, an exchange designed to simplify the DeFi and Web3 investing process. Dyor exchange offers self-custodial wallet services, which are permissionless and secure.
This multi-chain wallet from Dyor exchange has been designed with the intention of hassle-free setup. The process can be completed in seconds, and the wallet provides users access to over 30 cryptocurrencies without needing KYC.
Such platforms and their services are evidently gaining traction among users, evident from the hype Dyor exchange has received. Ahead of the launch of its app, the exchange opened the sign-ups for the waitlist, which, after receiving an overwhelming response of over 600,000 members, had to be closed earlier than the anticipated deadline.
Addressing the app's demand, Markuss Jonans, CEO of Dyor, stated,
"We aspire to be the app where users navigate the intricate landscape of allocating their capital on-chain, identify which tokens to acquire and discern the narratives that captivate and stand out the most."
Thus, going forward, the crypto market will likely see a substantial increase in the demand for self-custodial wallets.
