The custodial layer refers to a framework or system where a third party holds and manages users’ digital assets. This means that instead of individuals directly controlling their funds through personal wallets, they entrust their assets to an organization, such as an exchange or a wallet service.In a custodial setup, the third party is responsible for various tasks, including security, storage, and transaction processing. Users typically create accounts with these services to buy, sell, or trade assets while the organization takes care of the underlying blockchain interactions.While custodial services offer convenience and can simplify user experiences—especially for those new to the space—they come with risks. Users must trust the custodian to protect their assets, and if the service experiences breaches, hacks, or mismanagement, users could lose their funds. Therefore, understanding the implications of the custodial layer is essential for users when choosing how to store and manage their digital assets.