The downfall of centralised digital asset platforms such as FTX, Celsius, and BlockFi and severe actions from the SEC towards centralized exchanges such as Coinbase and Binance has led to a surge in DEX monthly volumes up 444% from April 2023 $31.9 billion to $173 billion May 2023, according to Dune Analytics. The growing need for self-custody solutions has become as prominent as ever alongside the education of the usage of self-custody solutions. In the digital era we live in, it has become an increasing concern to ensure that individuals and institutions understand the use of self-custody solutions. Ensuring privacy and security is a top priority whether you’re holding crypto, digital collectibles, or any other digital wealth; hence, the below illustrates the key considerations you need to know with regard to the concept of “self-custody”.

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Understand The Basics - what is self-custody?

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“Self-custody” refers to directly holding and managing your own digital assets without intermediaries like exchanges and custodial services. This practice allows total control of assets, which consequently provides autonomy, security, and privacy.

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Choose your own solution

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The foundation of self-custody lies in being able to select a reliable solution. The main security features to look for include, as a priority, multi-factor authentication, biometric authentication and multi-party computation / multi-signature computation. Hardware wallets like Ledger also provide an extra layer of protection, maximising security by storing assets offline and away from potential online threats. However, the recent news regarding the Ledger Recover program has raised some scrutiny as Ledger had long stated that there was no way to create a firmware update that would allow the private key to be exported from the device. Ledger Recover does just that hence the confusion to the general public. But, all in all - Ledger does allow flexibility to users whether they would want to opt in to the Ledger Recover program.

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Multi-party computation wallets have lacked adoption in the retail sector compared to institution players. Multi-party computation essentially divides the private key into multiple shares which are distributed across several parties, allowing for better control and permissions with respect to the access of the wallet. Hence, not widely adopted towards the retail segment as of now due to the higher complexity of setting-up compared to hardware wallets but is gaining more attention due to the security features it has over hardware wallets and the recovery of private keys.

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Create Strong and Unique Passwords & Keep your Private Keys Secure

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One of the easiest and most efficient ways to enhance security in a self-custody setup is to create strong and unique passwords. The best approach to building strong and unique passwords is to combine uppercase and lowercase letters with numbers and special characters and avoid the use of common phrases or personal information. Using a reliable password manager to securely store and generate complex passwords is also a good option. Secondly, private keys are access codes to your wallets hence keeping your private keys with you is essential and not storing them on the internet or sharing it with anyone is highly recommended.

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Enable Two-Factor Authentication (2FA)

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After choosing a secure password and storing your private keys in a secure place, the next step is to add extra layers of security with two-factor authentication. Two-factor authentication requires an additional form of verification, such as a special code generated by an authenticator app or sent via SMS. The 2FA option should be used wherever possible for wallets, email accounts, and other associated services.

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Regularly Update and Secure Your Devices

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Keeping devices updated with the latest security patches and software upgrades is crucial to maintain a secure self-custody environment. This process involves installing reputable antivirus and anti-malware software and regularly scanning devices for any potential threats. You can also consider setting up a separate, dedicated device for self-custody to minimise the risk of exposure to malware or keyloggers.

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Disconnect from Unknown DApps

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Self-custody wallets allow users to connect with other DeFi protocols to access features such as staking, farming, trading,, and other dApps. It is recommended to disconnect from the dApp once you have finished accessing that particular feature.

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Back up Your Wallet and Secure Your Recovery Phrase

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If you ever lose or have your device stolen, it shouldn't mean you lose your valuable digital assets forever. It's crucial to back up your wallet consistently and keep the recovery phrase or seed phrase stored securely offline in multiple safe places. You might want to explore hardware-based backup alternatives or multi-signature wallets, to ensure added protection for your wallets

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Look out for Phishing Attacks

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Phishing attacks are common in the digital space. These threats come in forms of suspicious emails, messages, or websites requesting personal information and login credentials. Always verify the authenticity of the source before providing any sensitive data, and don’t click on unknown or suspicious links.

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Why is self-custody not a universal norm?

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Self-custody solutions can range from hardware wallets to multi-signature wallets, some providers may involve complex set-up procedures and prohibitive business models, while still involve a centralized service included defeating the purpose of the self-custody theme.

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Safeguarding your digital assets is the first step to solidify as an individual, corporate or institution before exploring the digital assets ecosystem freely. With io.vault, a multi-signature self-custody solution, securing your digital assets has never been easier or more intuitive.

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io.vault is a secure self-custody solution that allows users to securely hold and transact their digital assets across the DeFi ecosystem. It uses advanced cryptographic technologies like Multi-Party Computation (MPC) and Threshold Signature Schemes (TSS) to distribute cryptographic signing material across multiple individuals within your organisation or if you're an individual, across trusted stakeholders . This customizable and scalable approach ensures the secure management of your digital assets, giving you peace of mind throughout your DeFi journey.

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If you're interested in finding out more on how to enhance self-custody, security, and privacy of your valuable digital assets, feel free to reach out to us here.