# Non-Custodial Systems ⎊ Area ⎊ Resource 2

---

## What is the Custody of Non-Custodial Systems?

Non-custodial systems fundamentally change the custody model by allowing users to maintain direct control over their assets through private keys. This contrasts sharply with centralized exchanges, where users deposit funds into a platform-controlled wallet. The non-custodial approach removes the risk of exchange insolvency or malicious actions, as the platform never holds user funds.

## What is the Risk of Non-Custodial Systems?

The primary risk mitigation benefit of non-custodial systems is the elimination of counterparty risk, which is a significant concern in centralized derivatives markets. By preventing the platform from holding user collateral, non-custodial systems ensure that a platform failure or hack does not result in the loss of user assets. However, this shifts the responsibility for key management entirely to the individual user.

## What is the Architecture of Non-Custodial Systems?

The architecture of non-custodial systems relies on smart contracts to manage trading logic, collateral, and settlement processes. These contracts execute automatically based on predefined rules, ensuring transparency and immutability. This design allows for decentralized derivatives trading where positions are held directly by users in their wallets, rather than being recorded in a centralized database.


---

## [Transaction Ordering Systems Design](https://term.greeks.live/term/transaction-ordering-systems-design/)

## [Zero-Knowledge Proof Systems](https://term.greeks.live/term/zero-knowledge-proof-systems/)

## [Off-Chain Settlement Systems](https://term.greeks.live/term/off-chain-settlement-systems/)

## [Financial Systems Theory](https://term.greeks.live/term/financial-systems-theory/)

## [Hybrid Systems Design](https://term.greeks.live/term/hybrid-systems-design/)

## [Cross-Chain Margin Systems](https://term.greeks.live/term/cross-chain-margin-systems/)

## [Zero Knowledge Systems](https://term.greeks.live/term/zero-knowledge-systems/)

## [Greeks-Based Margin Systems](https://term.greeks.live/term/greeks-based-margin-systems/)

## [Derivative Systems Design](https://term.greeks.live/term/derivative-systems-design/)

## [Oracle Systems](https://term.greeks.live/term/oracle-systems/)

## [Hybrid Oracle Systems](https://term.greeks.live/term/hybrid-oracle-systems/)

## [Reputation Systems](https://term.greeks.live/term/reputation-systems/)

## [Portfolio Margining Systems](https://term.greeks.live/term/portfolio-margining-systems/)

## [Risk-Adjusted Margin Systems](https://term.greeks.live/term/risk-adjusted-margin-systems/)

## [Systems Risk Management](https://term.greeks.live/term/systems-risk-management/)

## [Non-Linear Systems](https://term.greeks.live/term/non-linear-systems/)

## [Non-Custodial Trading](https://term.greeks.live/term/non-custodial-trading/)

## [Hybrid Market Architectures](https://term.greeks.live/term/hybrid-market-architectures/)

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---

**Original URL:** https://term.greeks.live/area/non-custodial-systems/resource/2/