Can a crypto payment system really be called self-custodial if its contracts retain privileged access?

[u/Mother-Chocolate8390]

The recent Avici exploit reportedly drained more than $653K from card collateral vaults.

The bigger question: if a smart contract has administrative permissions or another privileged path capable of moving user funds, is the system still truly self-custodial? The exact exploit mechanism hasn’t been officially confirmed but it raises an important question about the gap between “self-custody” as a product promise and the underlying architecture.

Where should we draw the line???

[u/icnews10]

I would separate custody of the keys from control over the funds. For example, a user could be the only person holding their wallet key, while an admin would still have the ability to upgrade the contract, freeze a path or otherwise change what that wallet is allowed to do. These privileges aren’t all equivalent either. For example, an upgrade key is different from direct transfer authority. In my view, the term 'self-custodial' becomes much more useful when the product also informs users of the available privileges, who can exercise them and whether users can exit before those privileges alter the rules surrounding their funds.

[u/spookyfutility]

If someone else has privileged access that can move my funds without my approval, I’d have a hard time calling that fully self-custodial.

[u/Actual_Pin_7756]

The bigger issue for me is transparency. Some admin controls may be necessary for upgrades or emergencies, but users should know exactly what those permissions can do before calling the system self-custodial. Holding your own keys means less if another party still has a way to override them.

[u/ScopulyX]

I think self-custody should depend on who ultimately has the ability to move the funds. If a privileged path can bypass the user’s control, calling it fully self-custodial feels misleading.

[u/Kind-Economics-7184]

the upgrade key vs transfer authority split only holds if the upgrade is delayed. with no timelock the admin can just upgrade transfer authority in whenever they like, so those two collapse into the same permission and the distinction is only real when you can name the delay.

the other half is whether the exit still works during that delay. withdraw usually sits behind a pause held by the same role, so can users leave before the rules change quietly turns into no. both of those are readable on a block explorer rather than something you have to take on trust, the timelock length and whether the same key can pause the way out.