Decentralized finance (DeFi) risk management firm Gauntlet has joined forces with DeFi lending protocol Morpho shortly after ending its collaboration with Aave.
Partnership Details:
Announced on Feb. 27, the partnership involves Gauntlet creating its lending products on MorphoBlue, a newly established protocol enabling firms to establish their lending and borrowing pools known as “vaults.”
MorphoBlue allows risk managers like Gauntlet to independently create and manage lending protocols, diverging from the model where lending pools are accountable to decentralized autonomous organizations like AaveDAO.
The unexpected separation from Aave was disclosed by Gauntlet’s co-founder and operating chief, John Morrow, in a Feb. 21 post on the AaveDAO forum. Morrow cited challenges in navigating inconsistent guidelines and objectives of major stakeholders.
The partnership with Morpho resolves uncertainties surrounding Gauntlet’s future direction following its split from Aave, as many DeFi analysts speculated on its next steps.
Morpho co-founder Paul Frambot criticized Aave’s actions, accusing the protocol of hindering Morpho’s growth through initiatives like the Merit reward program. Frambot positioned Morpho as a competitor to Aave and Compound, emphasizing its Blue protocol’s transparency and robust risk management features.
Despite Morpho’s emergence, Aave maintains its leadership in the DeFi lending sector with over $9.3 billion in total value locked (TVL), compared to Morpho’s $2.7 billion TVL, according to DefiLlama data.
Frambot suggested that Gauntlet’s separation from Aave was inevitable due to misaligned incentives, scalability challenges in cash flow, and the intersection of politics and complex mathematical considerations.
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