Custodial vs. Non-Custodial
What is a custodial wallet?
A custodial wallet is a wallet in which a third party stores your private keys. It means that a third party gets complete control over crypto-assets while a user can only make permission to send or receive payments. The custodial wallet is similar to how a bank account works, there is no full control over your money inside of it — they do remains yours, but they are in the hands of another company.
- Free Transactions
The most significant benefit of a custodial wallet is that it, unlike other wallets, does not demand transaction fees for transactions within the ecosystem.
- Insurance in case of password loss
Since a third party manages custodial wallet, even if user loses password, key or forgets the mnemonic phrase, it is possible to regain access to the wallet and stored funds.
- Higher Backup Possibility
Another advantage of custodial wallets is that the central authority managing your wallet offers backup facilities that make it easier to undo any transaction or restore a previous version.
- Third-party control
Custodial wallets users do not have autonomy, if they want to withdraw their funds their transaction has to be reviewed first. Also they are not able to properly participate in PoS consensus.
· Data Breach Threat
In custodial cryptocurrency wallets, users’ funds are stored in cold and hot wallet storage. Although these wallets are not an easy target for hackers, they are still vulnerable to security breaches.
- No Offline Facility
The Internet connection is a must for accessing the Custodial wallets.
- Chance not to receive forked/airdropped coins.
Users may not be able to receive full benefits they are eligible to if the wallet they are using chooses not to support forked or airdropped asset.
- Loss of access
In case of a wallet’s team misbehavior or for legal reasons users can be locked out of their wallet, blocked on the platform or have their account frozen.
Non-custodial wallets allow their users to fully manage and own their private keys and data. During the setup process the wallet will let you download a private key file or a mnemonic phrase.
- Full Control
Users have full access and control over their funds, and no third party handles their assets.
Since all of the details associated with users’ wallets and funds rely on themselves, there is a much lower risk of a data breach.
- “Instant” Withdrawals
Transactions don’t require third party approval. This streamlines the entire process and makes the withdrawal process faster.
- Full forks/airdrops support
Users can get access to any fork or airdropped crypto-asset they are eligible to. Even if the wallet that they are currently using doesn’t support one of the assets, they can quickly get access to them by importing their address to the wallet that supports them (since they have their private key or mnemonic phrase).
- Participation in consensus
Non-custodial wallet users can participate in PoS consensus by staking/voting/delegating their assets. They are free to choose which validator they want to support.
- Potential loss of access
Losing private key or mnemonic seed can result in losing access to the wallet, with no possibility of backup and recovery as there is no centralized agent with access to this data. Key and mnemonic phrase management is entirely up to the user.
- Network fees
All transactions are reflected on the chain in real-time, and users will have to pay commission fees for each transaction.
Why did we choose to be a non-custodial platform?
Our main functionality is centered around participation in PoS projects, so it was crucial for us to become a non-custodial platform. Our users are free to choose if they want to stake their assets or simply want to hold them, we do not enforce any kind of censorship, and allow our users to vote for any validator of their choice. Some custodial platforms indeed offer staking as a service. Still, in our opinion, this creates needless centralization (As they usually become validators and vote for themselves or vote for one partner-validator) and robs users of freedom to some degree (As users can’t choose whom to vote for).
Citadel.one is a non-custodial Proof-of-Stake platform for the management and storage of crypto assets. In the initial release, users can create public addresses for all supported networks with one seed phrase, connect their ledger or trezor device, or import an address generated by another wallet. The analytical dashboard provides relevant information on wallets’ balances and networks’ main metrics. One of the main functions of the Citadel.one platform is participation in the PoS consensus — users can stake and delegate their assets, claim rewards, and follow the latest network proposals in the voting tab. Citadel.one offers its users an instant cryptocurrency exchange service that allows fast and secure crypto assets swap, and it is also possible to buy and sell crypto with a credit or debit card.