Blockchain & Networks

self-custodial wallets

Wallets where users hold private keys and maintain control of their funds, rather than entrusting assets to a third party.

Self-custodial wallets are wallets in which you control the private keys, not a custodian. This model minimizes counterparty risk and keeps assets on-chain, essential for emergency-liquidity goals. In practice, you can interact with BTC-backed lending via non-custodial lending or CeFi, but you still hold keys and approve each action. When evaluating options, compare non-custodial wallets (where you manage keys and engage with smart contracts) with custodial wallets (where a third party holds your assets), hardware and multi-sig setups for security, and the Sats Terminal self-custodial wallet (Privy), which is created automatically at signup and remains under your control. Sats Terminal aggregates offers from DeFi lenders like Aave and Morpho and from CeFi lenders, enabling access to stablecoins (USDC) against BTC collateral without selling BTC. The choice affects custody risk and liquidity readiness; in an emergency, self-custodial wallets can speed up liquidity while preserving Bitcoin exposure.

Related Terms

DeFi Fundamentals

bridging financing for cryptocurrency holders

A liquidity option using crypto collateral to borrow stablecoins without selling the underlying asset.

DeFi Fundamentals

importance of collateral loans

Loans backed by collateral, typically crypto assets, enabling borrowers to obtain liquidity without selling the asset.

Lending & Borrowing

a loan-to-value ratio

The proportion of a loan to the collateral's value, expressed as a percentage.

DeFi Fundamentals

benefits of bitcoin-backed loans

A Bitcoin-backed loan lets you borrow stablecoins using BTC as collateral, preserving your crypto exposure while gaining liquidity.