Detailed Instructions

Identify the custody structure used by the protocol. The primary models are direct tokenization (asset-backed tokens), special purpose vehicles (SPVs), or synthetic exposure via oracles.

• Sub-step 1: Check the smart contract holding the underlying collateral. For SPV models, verify the legal entity address and its on-chain attestations.
• Sub-step 2: Review the minting/burning logic. Ensure tokens are only issued upon verified deposit receipts from a trusted custodian or legal entity.
• Sub-step 3: Analyze redemption mechanisms. Confirm there is a clear, audited process for burning RWA tokens and releasing the underlying asset to the user.

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// Example: Checking a basic minting guard
require(attestedDeposit[depositId] == true, "No attested deposit");
require(msg.sender == authorizedCustodian, "Unauthorized");
_mint(beneficiary, depositAmount);

Tip: Look for time-locks or governance delays on mint/redemption functions, which can mitigate certain attack vectors.

Detailed Instructions

RWA security depends heavily on off-chain legal enforceability. Scrutinize the documentation for the legal entity (often an SPV) that holds the assets.

• Sub-step 1: Locate and review the protocol's publicly available legal opinions or entity formation documents. Verify the jurisdiction.
• Sub-step 2: Examine the attestation feed. Determine who provides it (e.g., a licensed trustee, auditor) and how it's delivered on-chain (oracle, multi-sig signature).
• Sub-step 3: Assess the frequency and granularity of attestations. Daily proof-of-reserves is stronger than quarterly balance sheet summaries.

Tip: Protocols like Centrifuge publish periodic reports from independent auditors. The absence of regular, detailed attestations is a major red flag.

Detailed Instructions

For protocols using price or data oracles for synthetics or valuations, the oracle design is a critical attack surface.

• Sub-step 1: Identify the oracle provider (e.g., Chainlink, Pyth, a custom committee). Decentralized, battle-tested oracles are preferable.
• Sub-step 2: Check the update frequency and deviation thresholds. Stale data for volatile assets poses liquidation risks.
• Sub-step 3: Analyze fallback mechanisms and circuit breakers. Look for functions that can pause the system if oracle data is deemed faulty.

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// Example: Checking a Chainlink price feed heartbeat
uint256 stalePriceTime = 24 hours;
require(
    block.timestamp - updatedAt < stalePriceTime,
    "Stale price data"
);

Tip: For non-price data (e.g., loan repayment status), understand how the oracle cryptographically verifies information from the off-chain source.

Detailed Instructions

Simulate tail-risk events to evaluate the stability of the protocol's economic design. Focus on the alignment of incentives between actors.

• Sub-step 1: Model asset default scenarios. Calculate the loss absorption capacity of junior tranches or staked insurance pools.
• Sub-step 2: Analyze liquidation mechanisms for undercollateralized positions. Check if liquidators are properly incentivized and if auctions can handle low liquidity.
• Sub-step 3: Stress test the native token's role. If used for staking/insurance, model a bank run scenario where stakers withdraw en masse.

Tip: Use historical data from similar traditional finance assets (e.g., corporate bond default rates, real estate vacancy shocks) to inform your stress test parameters.

Detailed Instructions

Understand who can change critical parameters or logic. Excessive governance power can undermine other security measures.

• Sub-step 1: Review the smart contract upgradeability. Is there a TimelockController (e.g., 48-hour delay) on the proxy admin? Note any functions that are excluded from delays.
• Sub-step 2: Analyze governance token distribution and voting power concentration. A multi-sig with 5/9 signers is less centralized than a 2/3.
• Sub-step 3: Identify privileged roles. List all addresses with permissions to pause contracts, change oracle addresses, adjust fees, or modify asset whitelists.

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// Example: Checking for a timelock-controlled upgrade
address public timelock = 0x42cd...;
function upgradeTo(address newImplementation) external {
    require(msg.sender == timelock, "Caller is not the timelock");
    _upgradeTo(newImplementation);
}

Tip: Proposals that alter fee structures or asset eligibility can have significant, subtle impacts on security assumptions.