Gauntlet, a well-known risk management firm in the decentralized finance (DeFi) industry, has made a strategic move by switching its collaboration from Aave to Morpho. This decision comes shortly after Gauntlet ended its partnership with Aave, a leading DeFi lending protocol.
The transition to MorphoBlue was announced on February 27, and it involves the development of lending products on MorphoBlue, a unique protocol that allows companies to establish their own lending and borrowing pools called “vaults.” Unlike traditional lending protocols, MorphoBlue empowers risk managers like Gauntlet to independently create and oversee lending protocols, eliminating the need for external risk management advisors.
Gauntlet’s decision to sever ties with Aave was driven by challenges encountered while navigating Aave’s decentralized autonomous organization (DAO) framework. In a forum post on February 21, John Morrow, Gauntlet’s co-founder and operating chief, highlighted difficulties in following inconsistent guidelines and unspoken objectives of major stakeholders within AaveDAO.
This unexpected rift occurred just two months after Gauntlet signed a significant one-year contract worth $1.6 million with AaveDAO, signaling a notable shift in Gauntlet’s operational direction within the DeFi ecosystem.
Amid speculation about Gauntlet’s future partnerships after Aave, Morpho emerged as a suitable collaborator, bringing clarity to the DeFi market landscape. Paul Frambot, co-founder of Morpho, emphasized Morpho’s competitive stance against Aave and Compound, asserting that Morpho’s Blue protocol directly competes with AaveV3 and CompoundV3. Frambot criticized Aave’s attempts to hinder Morpho’s growth through initiatives like the Merit reward program while highlighting Morpho’s commitment to transparent incentives and robust risk management mechanisms for its users.
Despite Morpho’s growing presence, Aave remains the dominant force in the DeFi lending arena, with over $9.3 billion in total value locked (TVL), compared to Morpho’s $2.7 billion and Compound’s $978 million, according to DefiLlama data.
In a subsequent statement, Frambot described Gauntlet’s departure from Aave as inevitable, citing misaligned incentives, scalability challenges in cash flow management, and the complexities of navigating political dynamics intertwined with complex mathematical models.
