Skink, a CFD or Contract for Difference, is an agreement between two parties, usually a broker and a trader to trade a the price of another asset, e.g. the share price of Apple. The value of the contract is maintained by the unconditional commitment of the broker to pay the trader the pegged price when they want to exit the contract. A Self Managed Investment (SMI) has no counterparty like the broker in a CFD relationship. For example a SMI could be created where the purpose of the token was to track the share price of Apple, just like the CFD. However this parity of the token with Apple’s share price would be maintained by the expectation of the token holders themselves — they would have bought the token solely for this purpose. When the token holder wants to exit the position they trade their token on an exchange. Both systems carry risks but the risks are different which is why holding SMIs help with portfolio diversification. With CFDs you have counterparty risk — the trader relies on the ability of the broker to pay. The broker is also part of the dependencies of the financial system so their ability to pay may have nothing to do with them per se, but could be the result of some financial event far removed from them that still undermines their financial position. With SMIs the risk is one of liquidity — will there be buyers available when the token holder wants to exit the position.