Custody

Escrow

A important DeFi primitive is the ability to escrow or custody funds directly in a smart contract.

It's different to centralized finance where we need to trust a custody organization, such as bank.

Escrow opens oppotunities:

• retaining fees and disbursing incentive
• token swap
• market making of a bonding curve

It has riskes, too. We need to be careful that the token can be permanently custodied if the contract doesn't encode mechanism for releasing the funds.