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Risk tiers help you describe to your users what level of risk-reward tradeoff a vault targets. Gauntlet actively curates which DeFi markets a vault can deploy into, how much capital goes to each, and under what conditions allocations change. This is why two vaults on the same protocol can have very different risk-return profiles.

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Risk Tiers

Gauntlet organizes vaults into three tiers:

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Prime

The most conservative tier. Prime vaults allocate to blue-chip markets with deep liquidity, established collateral assets (ETH, stETH, USDC, USDT), and proven oracle infrastructure. Prioritizes capital preservation over maximum returns.

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Balanced

Moderate risk-reward. Balanced vaults access a broader set of markets, including mid-tier collateral and shorter track records. Position sizing offsets the incremental risk.

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Frontier

Higher yield potential with correspondingly higher risk. Frontier vaults may allocate to newer protocols, less liquid markets, or novel collateral types. Per-market concentration limits manage tail risk. For risk tiers in practice, see the Morpho page.

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What Gauntlet Evaluates

Before including a market in a vault’s allocation set, Gauntlet assesses:
  • Smart contract risk — audit history, production maturity, incident record.
  • Liquidity risk — depth, utilization patterns, stress behavior.
  • Oracle risk — reliability, decentralization, manipulation resistance.
  • Counterparty risk — borrower concentration, collateral governance exposure.
  • Market parameters — LLTV thresholds, interest rate models, liquidation incentives.
Markets that degrade on any dimension can be removed or have their allocation reduced.

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Exposure Controls

Gauntlet enforces concentration limits, correlation constraints, and rebalancing triggers — both off-chain (risk systems) and on-chain (hook validation). For on-chain enforcement details, see Aera V3 Hooks.