Web3 refers to a decentralized internet built on blockchain technology, aiming to reshape the digital landscape by prioritizing privacy, security, and user control. Unlike the current web, where power is centralized among a few tech giants, Web3 envisions a more equitable ecosystem where users own their data and transactions occur peer-to-peer without intermediaries. Smart contracts, digital currencies, and decentralized applications (dApps) are integral components, enabling trustless interactions and fostering innovation across various sectors like finance, gaming, and social networking. In essence, Web3 represents a paradigm shift towards a more transparent, inclusive, and resilient internet infrastructure.
A DeFi (Decentralized Finance) wallet is a digital tool that allows users to securely store, manage, and interact with their cryptocurrency assets within the decentralized finance ecosystem. Unlike traditional wallets provided by banks, DeFi wallets give users full control over their funds without relying on intermediaries. With a DeFi wallet, individuals can access a wide range of decentralized financial services such as lending, borrowing, trading, and yield farming directly from their device. These wallets typically offer features like private key management, seamless integration with decentralized applications (dApps), and compatibility with various blockchain networks. Essentially, a DeFi wallet empowers users to participate in the emerging decentralized financial landscape, enabling them to earn interest, invest, and engage in financial activities without the need for traditional financial institutions.
Self-custody in DeFi (Decentralized Finance) refers to the practice of individuals retaining full control and responsibility for their cryptocurrency assets without relying on third-party intermediaries like exchanges or custodial services. In traditional finance, when you deposit funds in a bank or use a centralized exchange, you are entrusting them with custody of your assets. However, in DeFi, users can maintain ownership of their assets by using self-custody solutions such as hardware wallets, software wallets, or smart contract wallets. By holding their private keys, users have complete control over their funds and can directly interact with DeFi protocols to lend, borrow, trade, or invest their assets. This approach enhances security and privacy, as users are not exposed to the risks associated with centralized platforms, such as hacks or regulatory issues. Self-custody aligns with the core principles of decentralization, empowering individuals to manage their finances autonomously within the DeFi ecosystem.