Custodial vs non-custodial wallets

Custodial wallets are controlled by a third party who manages your private keys. This type of wallet gives you limited control over your funds and transactions. Custodial wallets can be found on centralized exchanges (CEXs).

Non-custodial wallets are owned and controlled by you. You are responsible for keeping the secret key (or seed phrase) secure, as it is the only way to access and manage your assets. You will lose access to your wallet if you lose the seed phrase. Therefore, keeping the seed phrase away from third parties is crucial to avoid financial loss. Non-custodial wallets are necessary for interacting with decentralized exchanges (DEXs) and applications (dApps).