TL;DR
- Gauntlet surprises by leaving Aave and partnering with Morpho in the DeFi space.
- Morpho enables Gauntlet to create and manage its own lending protocols, changing the risk management paradigm in DeFi.
- The partnership sparks competition between DeFi protocols, with Morpho challenging Aave and Compound with a more transparent and market-oriented approach.
In a surprise move in the world of decentralized finance (DeFi), risk management firm Gauntlet has announced a partnership with DeFi lending protocol, Morpho, just days after its abrupt split from Aave, another giant in the DeFi space.
The partnership between Gauntlet and Morpho marks a significant change in the way risk is managed in the DeFi ecosystem.
Historically risk management has operated under a pull model within DAOs via other service providers, delegates, and community. In MetaMorpho, risk management is a first-class citizen and the pull comes directly from the market. We anticipate stress-testing our capabilities and… https://t.co/qoz8aKefjp
— Gauntlet (@gauntlet_xyz) February 27, 2024
Historically, risk management operated under a request model within decentralized autonomous organizations (DAOs) through other service providers, delegates, and the community.
However, with this partnership, Morpho places risk management at the center of its operation, allowing demand to come directly from the market.
The partnership announcement comes shortly after John Morrow, co-founder of Gauntlet, announced the severing of his firm’s relationship with Aave, citing difficulties navigating inconsistent guidelines and unwritten goals from key stakeholders.
This split was especially shocking as Gauntlet had recently signed a one-year deal worth $1.6 million with AaveDAO
The new partnership with Morpho clears up uncertainty about Gauntlet’s next step after the split with Aave.
At Morpho, Gauntlet will have the opportunity to create and manage its own lending protocols, which represents a more market-oriented approach and possibly more reactive to market conditions.
Paul Frambot, co-founder of Morpho, did not miss the opportunity to criticize Aave, accusing the protocol of trying to hinder Morpho’s growth by introducing a rewards program called Merit.
Additionally, Frambot highlighted how Morpho aims to compete with Aave and Compound, offering more transparent incentives and risk management for users through its Blue protocol.
Despite the competition, Aave remains the DeFi market leader in lending, with over $9.3 billion in total value locked (TVL), compared to $2.7 billion and $978 million for Morpho.
However, the partnership between Gauntlet and Morpho suggests a shift in the risk management paradigm in DeFi, with a more decentralized and market-oriented approach.
The partnership between Gauntlet and Morpho marks a new chapter in the evolution of the DeFi ecosystem, where risk management becomes fundamental and reactive to market demands, offering direct competition to established leaders in the space.
