Blockchain Due Diligence
8 assessment areas for evaluating L1s, L2s, and sidechains before deploying capital on new infrastructure. Layer upon our General DD framework.
Decentralisation and Validator Set
Validator Distribution
Number and distribution of validators securing the network.
Stake Concentration
Stake concentration and Nakamoto coefficient analysis.
Geographic Diversity
Geographic and jurisdictional diversity of node operators.
Rotation Mechanism
Validator selection and rotation mechanisms over time.
Consensus Mechanism and Security Model
Consensus Algorithm
Core consensus algorithm and finality guarantees.
Economic Security
Attack cost calculations and overall economic security.
Slashing Conditions
Slashing conditions, fault attribution, and penalties.
Theoretical Vulnerabilities
Known theoretical vulnerabilities and network threat vectors.
Client Diversity and Implementation Risk
Client Implementations
Number of distinct client implementations available.
Client Distribution
Client software distribution among network validators.
Security Coverage
Bug bounty programs and continuous security audit coverage.
Upgrade Coordination
Process and risk management for network upgrades.
Uptime and Reliability
Historical Uptime
Historical uptime records and frequency of network outages.
Block Consistency
Block time consistency under varying network loads.
Incident Response
Track record of incident response by core development teams.
Recovery Procedures
Network halt recovery procedures and stress testing.
Maturity and Ecosystem Development
Mainnet Maturity
Time since mainnet launch and Lindy effect evaluation.
Developer Activity
Developer activity metrics and overall tooling quality.
DeFi Ecosystem
Depth, diversity, and liquidity of the native DeFi ecosystem. Evaluate protocols via Protocol DD.
Interoperability
Bridge infrastructure and cross-chain interoperability options.
Validator Behaviour and Centralisation Risk
MEV Practices
MEV extraction practices and structural advantages.
Censorship Capabilities
Documented censorship incidents or network capabilities.
Pool Concentration
Liquid staking token (LST) and staking pool concentration. Assess LSTs via Asset DD.
Foundation Influence
Foundation or core team influence over validator sets.
Bridge Security and Cross-Chain Risk
Canonical Bridge Design
Canonical bridge architecture and trust assumptions.
Audit History
Bridge smart contract audits and historical incident logs.
Third-Party Exposure
Ecosystem exposure to third-party messaging protocols.
Asset Backing
Verification procedures for wrapped and synthetic assets. Check via asset mechanisms.
Regulatory and Jurisdictional Risk
Foundation Jurisdiction
Legal jurisdiction of the core foundation and team.
Validator Concentration
Regulatory exposure from validator jurisdiction concentration.
Regulatory Posture
Overall regulatory posture and proactive compliance measures.
Censorship Policies
Network-level censorship capabilities and formal policies. Review red flags for disqualifiers.
Foundational governance, security, and economic design evaluation →
Deep-dive into tokens, stablecoins, LSTs, and LRTs evaluation →
Lending platforms, DEXs, yield vaults, and derivatives protocols analysis →
Critical warning signs that immediately disqualify any opportunity →
Comprehensive Risk Analysis
Clearstar’s evaluation models cover Blockchain Infrastructure, DeFi Mechanisms, and Smart Contract Security.
View All DD FrameworksExplore our full documentation