Custodial vs. Non-Custodial Apps: Which Side Are You On?

If you're building a product on Stellar — on any blockchain network, really — one of the first things you have to figure out is how to manage users' secret keys. There are two fundamentally different approaches, and they're practically and philosophically at odds: custodial solutions keep keys on behalf of users; non-custodial solutions put keys in users' hands. The big question: which one is more important to the Stellar ecosystem right now?

On 10/29/2020 at 11:30 AM ET, SDF is hosting an Ecosystem Roundtable to find out. We're inviting some key players from both sides of the aisle to debate the issue, explain the advantages and disadvantages of each approach, and talk about which one is better for product development, blockchain adoption, and the future of fintech.

Why now? In 2020, two new developments laid the groundwork for better Stellar key management:

• CAP 27: First-class multiplexed accounts, which was included in Protocol 13, allows services to map a single Stellar account to multiple users. It could make custodial solutions a lot easier to build.
  
• SEP 30: Recoverysigner: multi-party key management of Stellar accounts defines an API that enables a user to regain access to a Stellar account after losing the private key without providing a third party control of the account. It could make non-custodial solutions a lot easier to build
  

At the moment, however, neither solution is readily accessible to companies building on Stellar: each would require the SDF and the ecosystem as a whole to put in time and effort to build out supporting infrastructure. Chances are, we're going to have to pick one to focus on first. Which should it be? What is the key management solution the ecosystem needs?