> For the complete documentation index, see [llms.txt](https://vaultbook.gauntlet.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vaultbook.gauntlet.xyz/vaults/morpho-vaults/curation-methodology-and-risk-factor-overview/due-diligence.md).

# Due Diligence

Our Vaults follow a disciplined risk management process designed to support resilience across changing market conditions. Before Gauntlet curates a new market and collateral asset, we conduct due diligence across both market-level and asset-level risks.

This review incorporates information from protocol teams, public documentation, on-chain data, technical materials, and ongoing monitoring. The diligence process is designed to evaluate whether an asset or market is suitable for inclusion in a Gauntlet-curated vault, while accounting for liquidity, security, operational, and market structure considerations.

Core areas of review include:

1. **Market Demand and Existing Lending Usage**\
   Evaluation of the asset’s use case, current and potential borrow demand, comparable lending markets, utilization trends, and relevance to vault depositors.
2. **Liquidity, Slippage, and Redemption Risk**\
   Review of on-chain liquidity, trading depth, liquidation feasibility, redemption mechanics, withdrawal timelines, liquidity backstops, and any gates or restrictions.
3. **Smart Contract and Technical Risk**\
   Review of contract architecture, audits, upgradeability, access controls, privileged roles, testing practices, monitoring, and other technical dependencies.
4. **Oracle, Exchange Rate, and Valuation Risk**\
   Assessment of price feeds, NAV or exchange-rate methodology, oracle infrastructure, update frequency, fallback logic, and valuation transparency.
5. **Governance and Operational Risk**\
   Review of governance structure, multisig or admin controls, timelocks, key management, incident response processes, prior incidents, and operational readiness.
6. **Cross-Chain and Bridge Risk**\
   Where applicable, evaluation of bridge architecture, cross-chain supply controls, messaging dependencies, emergency pause processes, bridge audits, and related incident history.
7. **Counterparty, Custody, and Legal Risk**\
   For RWA, off-chain, or hybrid assets, review of underlying assets, custody arrangements, reserve reporting, legal structure, redemption rights, and relevant counterparty exposures.
8. **Team, Organization, and Track Record**\
   Review of the protocol’s operating history, legal entity or governance structure, prior integrations, audits, team experience, and ongoing communication channels.
9. **Yield Strategy and External Integration Risk**\
   For yield-generating assets or strategies, review of strategy mandate, allocation mechanics, external protocol dependencies, risk controls, transparency, and de-allocation procedures.
10. **Asset-Specific Mechanisms**\
    Review of any unique features such as rebasing, staking or unstaking queues, transfer restrictions, allowlists, fee mechanisms, protocol-owned liquidity, wrapped-asset design, or other non-standard mechanics.

Together, these categories help Gauntlet assess whether a market or asset is appropriate for a curated vault and determine the ongoing monitoring considerations required after onboarding.


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