What are some advantages of federated custody?

Federated custody, also known as community custody or second-party custody, offers a middle ground between self-custody and third-party custody. It reduces the technical and personal responsibility burden of holding your own keys while avoiding the risks of centralized exchanges & custodial platforms.

Rather than relying on a single institution, federated custody distributes (federates) custody across multiple individuals known as guardians of a federation. Given the trust to safeguard assets is outsourced to them, guardians are typically known by federation members – but they can also be entirely pseudonymous. 

The federation model is flexible and can be tailored to suit different levels of trust & privacy needs based on local context. Ultimately, federated custody outsources key management & cost while eliminating single points of failure. The result is a "best of both worlds" solution that is both anti-fragile and accessible.