Non-custodial

What it refers to

Non-custodial describes a service that never takes possession or control of its users' assets (often searched as non-custodial crypto or non-custodial wallet). Users keep control through their own keys, and the service acts only on what a user authorizes. A custodial service, by contrast, holds assets on its users' behalf, the way an account at a centralized platform does.

The term describes a service or system. Self-custody is the related principle from the user's side: holding and controlling one's own assets directly.

Why this concept exists

When a service holds users' assets, users depend on that service to stay solvent, honest and available, and a failure at the service can lock their funds. Blockchain networks make it possible to use financial services without handing assets to an intermediary, and "non-custodial" names services built that way.

What this changes for system design

A non-custodial system has to carry out every action without ever holding user assets itself, and that shapes how each step is built.

SODAX is non-custodial and does not take custody. While an action is carried out, user assets sit in escrow in a smart contract, not with SODAX or any other party, and a trade completes as requested or reverts and returns the original assets. SODAX routes, quotes and settles, and a permissioned solver within the SODAX system performs the fill. Any trading is performed by the permissioned solver, not by SODAX.

SODAX also does not hold, own or deploy capital: the SODAX Liquidity Inventory is owned by the SODAX DAO. Apps that call the SODAX API offer these actions to their users on the same non-custodial basis.

Related terms

• Self-custody: the principle from the user's side
• Recoverability: completes or reverts
• Solver: who performs the fill
• Liquidity inventory: owned by the SODAX DAO
• SODAX System: the system that never takes custody