Glossary

Last updated: December 11, 2025

A

Allocated Markets

For lending vaults, allocated markets comprise the set of underlying DeFi lending markets that a vault supplies into. The vault’s APY is a function of the APYs borrowers pay in those markets, plus any relevant incentives, net of performance fees.

APY (Annual Percentage Yield)

The annualized return that suppliers receive on their assets supplied to a vault. Vault APYs change dynamically over time and are measured as a percentage.

B

Balanced Vaults (Competitive Yield Strategies)

Vaults that target higher yields than Prime while still keeping insolvency risk low, by allocating to a blend of blue-chip and some smaller-cap collateral markets. (Learn more)

C

Curator

The entity that designs, configures, and oversees a vault. On lending protocols, curators select markets to which the vault allocates supply, set caps, adjust allocations, and maintain risk management and performance over time. Curators can also curate vaults on perpetual futures protocols and implement delta-neutral trading strategies.

E

Ecosystem Vaults

Vaults deployed in partnership with DeFi protocols that integrate Gauntlet-curated vaults into their own user experience. These may be Prime, Balanced, or Frontier in risk profile. (Learn more)

F

Frontier Vaults (Maximum Yield Strategies)

Vaults that seek the highest yields by allocating to riskier collateral markets, which can have higher insolvency risk and volatility. (Learn more)

H

Health Factor

Health factor is an indication of a user’s borrow position health, calculated as (Collateral Value / Loan Value) × LLTV. A high health factor indicates a healthy position, while a health factor below 1 indicates a position eligible for liquidation. (Learn more)

I

Incentives

Vault suppliers may receive incentives based on their vault positions. Markets and Vaults can include incentives in the form of rewards and points added to incentivize supply. (Learn more)

Insolvency Risk

Risk of experiencing under-collateralized debt (i.e., the collateral value is less than the debt value). Insolvency impacts lenders, who may lose a portion of their supplied assets if an under-collateralized borrower fails to repay their debt and is not liquidated. (Learn more)

Interest Rate Model (IRM)

The interest a borrower pays on a loan is defined by the market’s interest rate model (IRM). Each market is launched with a specific and immutable IRM. Morpho implements an AdaptiveCurveIRM, which is designed to maintain a market’s utilization at around 90%. When utilization falls below 90% the borrow rate will gradually decrease, and if utilization surpasses 90% the borrow rate will increase.

L

Liquidation

Liquidation is the process of forcibly closing a loan position by repaying a borrower's debt and claiming their collateral. A borrow position that has crossed the allowed LLTV in the market is eligible for liquidation. (Learn more)

Liquidation Loan-to-Value (LLTV)

Liquidation Loan-to-Value (LLTV) is the threshold at which a borrower's collateralized position in a DeFi lending protocol becomes eligible for liquidation. Different protocols may use other terminology, including “liquidation threshold” or “liquidation ratio.” (Learn more)

Liquidity

Liquidity refers to the availability of assets that can be readily bought, sold, or exchanged without significantly impacting their price. Higher liquidity is crucial for liquidators to liquidate positions profitably.

Loan-to-Value (LTV)

A percentage metric that measures the size of a loan relative to the value of the collateral securing it, calculated as (Loan Amount / Collateral Value) × 100. In DeFi lending protocols, LTV serves as the primary indicator of a borrowing position's health and risk level. A position with $8,000 borrowed against $10,000 in collateral has an LTV of 80%.

M

Market Caps

Curators can set limits on how much of a vault’s supply can be allocated to a specific market. Caps are used to prevent over-concentration and to bound risk exposure per market.

Market Parameters

The fixed characteristics of each market: collateral asset, loan asset, liquidation loan-to-value (LLTV), interest rate model (IRM), and oracle. These are immutable once the market is created.

Morpho

A leading DeFi lending protocol that provides a trustless lending/borrowing layer and an abstracted vault layer (Morpho Vaults), where Gauntlet deploys and curates vaults. (Learn more)

Morpho Vaults

Non-custodial vaults that allocate supplier capital across Morpho lending markets. Curators oversee various vault actions, including market allocations, market caps, due diligence, liquidity monitoring, and overall risk management. (Learn more)

N

Non-Custodial

A non-custodial application is one where users retain direct control of their assets. Users hold their own private keys and interact with smart contracts directly from their wallets. In non-custodial applications, no intermediary ever takes possession of user funds. This is in contrast to custodial services (like centralized exchanges), where a third party holds assets on behalf of users.

O

Oracles

Oracles are price feeds used to determine the value of collateral and loan assets. Oracle prices are the exact prices used in the formula for calculating LTV. The largest oracle providers include Chainlink, Redstone, and Pyth. (Learn more)

P

Performance Fees

Performance fees are calculated as a percentage of the interest a user has earned in the vault. The Performance fee is charged on Native APY only and not on any yield derived from rewards or points. (Learn more)

Prime Vaults (Conservative Yield Strategies)

Vaults that target risk-adjusted yield from very low insolvency-risk strategies, allocating to blue-chip, highly liquid collateral markets. (Learn more)

S

Supplier

A user who supplies assets to a vault. Suppliers gain exposure to the vault’s strategy and risk profile while delegating day-to-day actions (allocations, due diligence, rebalancing, hedging) to a vault curator. Vault suppliers maintain control of their assets and can withdraw at any time due to the non-custodial nature of DeFi vaults.

Supply Asset

The specific token a user supplies into a vault (e.g., USDC, ETH). It’s the foundation of a given vault and determines what strategy and risk you’re getting.

T

TVL (Total Value Locked)

The total dollar value of assets supplied across one or more vaults.

U

Utilization

Utilization is the amount of a specific market’s supply that has been loaned to borrowers. If a market has $1M in supply and $900K has been borrowed, the utilization rate 90%. (Learn more)

V

Vault

A non-custodial smart contract that runs a yield strategy. A vault allocates supplied assets into underlying DeFi protocols (Morpho, Kamino, Drift, Symbiotic) following a defined strategy and risk tolerance.

Y

Yield

Yield refers to the percentage or total dollar return on an asset or position. While related, it is a more general and flexible term to define performance than APY.