Bitcoin is designed to be owned by us and make us our own bank without any third party interference. If you use the holding service, it is no different than you depositing your money in the bank. In addition to sending bitcoin to holding services will make it impossible for you to sell or use your bitcoin while your bitcoin deposit period has not ended, better hold your bitcoin and you can use them whenever you want.
Then why so many people use hot wallets and exchanges for holding their bitcoin? Only sophisticated holders use cold wallets and be their own bank. Most of the people just don’t care
Where did you get that information? Sophisticated holders? What is that?
People who keep their coins on the exchange are either traders or irresponsible. Anyway, they are not the majority. Those who keep their coins for long-term keep them in cold storage or in a hot wallet if it is not a large sum. I see no problem with that. In any case, it is better than trusting a third party or some smart contract that may or may not be safe in the long run.
People who care about their coins know how to protect them, those who don't care won't use your smart contract anyway.