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Glossary

Non-Custodial

A model where the user retains control of their private keys and assets are not held by a third-party custodian.

What is Non-Custodial?

A model where the user retains control of their private keys and assets are not held by a third-party custodian. Lygos is non-custodial by design. Your Bitcoin collateral is locked in a Discreet Log Contract on the Bitcoin blockchain. Lygos never takes possession of your private keys or holds your BTC in a company wallet. The DLC architecture ensures that your collateral can only be moved according to the pre-signed outcomes that you reviewed and approved before committing funds.

Full Definition

Non-custodial means the user, not a company, exchange, or platform, maintains control of their private keys and, by extension, their assets. In a non-custodial arrangement, no third party can unilaterally move, freeze, or seize the user's funds. Non-custodial models eliminate counterparty risk: even if the service provider becomes insolvent, gets hacked, or faces regulatory action, the user's assets remain under their control. The phrase 'not your keys, not your coins' captures this principle. Non-custodial is the opposite of custodial, where a third party holds the assets on the user's behalf.

How Lygos Uses This

Lygos is non-custodial by design. Your Bitcoin collateral is locked in a Discreet Log Contract on the Bitcoin blockchain. Lygos never takes possession of your private keys or holds your BTC in a company wallet. The DLC architecture ensures that your collateral can only be moved according to the pre-signed outcomes that you reviewed and approved before committing funds.

How Lenders Compare

LygosLednNexoUnchained
CustodyNon-custodial (DLC)CustodialCustodialCollaborative multisig
Rehypothecation0% (impossible by design)100%. Your BTC may be lent outYes, platform re-lends assetsNo
TechnologyDiscreet Log Contracts (Bitcoin-native)Centralized custodyCentralized custody2-of-3 multisig (manual)
Full comparison

Why this matters for borrowers

Understanding Non-Custodial helps you assess the real risks of Bitcoin lending. The difference between custodial and non-custodial models isn't just marketing. It's the difference between trusting a company and trusting cryptography.

Related Terms

Custodial vs. Non-Custodial LendingDiscreet Log Contract (DLC)RehypothecationCounterparty Risk

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