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Crypto Custody Challenges: Stuck in 2021 Despite Innovations
Custody Solutions Lagging Behind Technological Advancements
Despite notable progress in crypto custody solutions, the industry remains entrenched in outdated practices. Companies like Web3Auth and projects like Argent aim to simplify custody and improve user experience, but adoption rates have been lackluster.
The Convenience Dilemma in Crypto Custody
Compared to traditional finance, cryptocurrency custody lacks the convenience and security features that users have come to expect. Managing private keys and securing transactions can be complex and daunting for the average user, leading to a lack of confidence in engaging with the decentralized finance (DeFi) ecosystem.
The Discrepancy Between Total Value Locked (TVL) and Usage
Platforms like Safe by Gnosis offer advanced features for controlling funds and transactions, but their utilization in active DeFi interactions remains low. Despite billions of dollars stored in Safes, users are still primarily using them for cold storage rather than engaging with DeFi applications.
The Need for Enhanced Utility in Custody Solutions
Crypto custody solutions must evolve to offer more utility beyond asset storage. Users should feel empowered to explore the full potential of DeFi without compromising security.
Encouraging Signs in Raw ETH Usage
While only a small percentage of Ethereum supply is wrapped for DeFi use, there is a growing trend of Safe creators utilizing their Safes for raw ETH transactions. This shift indicates a potential move towards increased usage of secure custody solutions for active DeFi interactions.
Paving the Way for Simpler Custody Solutions
Efforts are underway to simplify crypto custody at a fundamental level, with initiatives like account abstraction and protocol-level enhancements. By focusing on user-friendly solutions and practical UX improvements, the industry aims to bridge the gap between security and usability in crypto custody.
Positive Trends Towards Enhanced User Experience
Despite the current challenges, the crypto industry is making strides in improving user protections and accessibility. With the proliferation of Layer 2 solutions, mobile-native experiences, and innovative wallet services, the path towards a decentralized and user-friendly financial ecosystem is becoming clearer.
About the Author
Carlos Mercado is a data scientist at Flipside Crypto, specializing in cryptocurrency research and data analytics. With a background in AI strategy and product development, Carlos brings a wealth of expertise to the field of blockchain technology and decentralized finance.
The information in the article is for informational purposes only. It does not constitute any investment advice. The author and CryptoBlockNews.com are not responsible for your profits or losses arising from your investments. Investment is ultimately based on many foundations such as knowledge, accumulation, experience, research and personal decisions.
