Custodial Wallet

A custodial wallet is a type of cryptocurrency wallet where a third party holds and manages the private keys on behalf of the user. This arrangement means that the external service has control over the user's funds and is responsible for authorizing transactions. While custodial wallets can offer user-friendly interfaces and assistance with key management, they require users to trust the custodian with the security of their assets. For web3 developers, integrating with custodial wallets can simplify user onboarding, especially for those less familiar with managing private keys. However, it's important to consider the trade-offs regarding security and control, as reliance on third parties can introduce potential risks.