DeFi risk manager Gauntlet has partnered with Morpho just days after it dropped Ave.
Decentralized finance (DeFi) risk management firm Gauntlet has teamed up with DeFi lending protocol Morpho just days after it abruptly split with Aave.
In the year The partnership, announced on February 27, will see Gauntlet create its own loan products on MorphoBlue, a new protocol that allows companies to create their own pools of loans and loans called “vaults”.
Typically, lender protocols hire firms like Gauntlet to help advise and manage risks. MorphoBlue, however, effectively gives risk managers the ability to create and manage their own credit protocols.
Historically, risk management has been done through a pull model in DAOs through other service providers, agents and communities. At Metamorpho, risk management is a first class citizen and the traction comes directly from the market. We keep stressing by trying our best and… https://t.co/qoz8aKefjp
— Gauntlet (@gauntlet_xyz) February 27, 2024
Morpho's borrowing and lending strategy differs from Aave's, lending pools to AaveDAO — a decentralized autonomous organization responsible for managing the protocol.
In the year
The unexpected split comes two months after Gauntlet signed a one-year, $1.6 million deal with AaveDAO.
The move to partner with Morpho clears up confusion among DeFi market experts, with many wondering about Gauntlet's next move after splitting with Aave.
Morpho founder Paul Frambot took aim at Ave in a Feb. 22 X post, introducing a rewards program he says the protocol is trying to prevent from Morpho's growth.
in order to. Aave is trying to counter the rise of morphine by introducing a rewards program called Merit. Although I prefer to avoid drama/politics to focus on Morpho, I have been asked countless times to comment on this idea. So, I will simply provide some clarifications on…
– Paul Frambot | Morpho (@PaulFrambot) February 19, 2024
Frambot has revealed how Morpho intends to compete with Aave and Compound – the two firms that have historically dominated the DeFi lending space.
From Frabot's perspective, the Morpho Blue protocol is a direct competitor to AaveV3 and CompoundV3, providing users with more transparent incentives and risk management.
According to Defilama data, Ave remains the leader in the DeFi lending market with more than $9.3 billion in total value locked (TVL), compared to $2.7 billion and $978 million for Morpho.
In a Feb. 22 X post, Frambot described Gauntlets' separation from Ave as inevitable, citing a combination of “poorly aligned” incentives, cash flow expansion problems, and politics and complicated math.
It was inevitable that the gauntlet would leave Aven in retrospect.
Working as a risk advisor for DAOs is very challenging: – Incentives are not well aligned – Cash flow is very uncertain and not scalable. – Politics is mixed with complicated math (not good and risky if you ask me).
– Paul Frambot | Morpho (@PaulFrambot) February 21, 2024
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