Gauntlet, a company specializing in managing risks for decentralized finance (DeFi), has formed a new partnership with the DeFi lending platform Morpho. This collaboration comes shortly after Gauntlet ended its association with another DeFi platform, Aave, in a rather sudden manner.
On February 27, it was announced that Gauntlet would start offering its lending products through MorphoBlue, a newly launched protocol. MorphoBlue is designed to let companies set up their platforms for lending and borrowing, referred to as “vaults.”
While lending platforms typically bring on board companies like Gauntlet for advice and risk management, MorphoBlue changes the game by enabling risk management firms to establish and oversee their lending services directly.
Morpho’s approach to lending and borrowing presents a contrast to Aave’s. In Aave’s system, lending pools are governed by the AaveDAO—a decentralized autonomous organization that oversees the protocol.
John Morrow, Gauntlet’s co-founder and chief operating officer, expressed his reasons for ending the partnership with Aave in a forum post dated February 21. He mentioned the challenges faced due to “inconsistent guidelines and unwritten objectives of the largest stakeholders” as the cause for the split.
This termination of partnership occurred two months after Gauntlet had committed to a one-year contract with AaveDAO, valued at $1.6 million.
The decision to collaborate with Morpho has resolved some of the uncertainties in the DeFi community regarding Gauntlet’s next steps following its departure from Aave.
Paul Frambot, a co-founder of Morpho, criticized Aave on February 22 via an X post. He accused Aave of hindering Morpho’s development by launching a reward scheme called Merit. Frambot further detailed Morpho’s strategy to compete with both Aave and Compound, which are prominent players in the DeFi lending market.
He positioned Morpho’s Blue protocol as a rival to AaveV3 and CompoundV3, emphasizing its superior transparency in incentives and risk management for its users.
Despite these developments, Aave continues to lead in the DeFi lending sector, with a total value locked (TVL) exceeding $9.3 billion. This is in comparison to Morpho’s $2.7 billion and another competitor’s $978 million, as per DefiLlama statistics.
Frambot also remarked on the inevitable nature of Gauntlet’s separation from Aave in another X post on February 22. He pointed to the misalignment of incentives, issues with scaling cash flow, and the entanglement of politics and complex mathematics as reasons for the split.
