Gauntlet Partners with Morpho Following Split from Aave, Aims to Reshape DeFi Lending
Summary:
Risk management company Gauntlet is partnering with DeFi lending protocol Morpho to create its own lending products, following its unexpected split with Aave. Believed to offer more transparent incentives and risk management, Morpho's Blue protocol is considered a potent rival to AaveV3 and CompoundV3. Despite the controversial split where Gauntlet cited inconsistent guidelines and unwritten objectives, Aave maintains a lead in the DeFi lending market.
DeFi risk management company, Gauntlet, is entering into collaboration with peer-to-peer lending protocol Morpho, not long after its sudden departure from Aave. Gauntlet made an announcement on February 27th regarding its creation of proprietary lending products on MorphoBlue, a fresh protocol which facilitates organizations to devise their own lending and borrowing pools, famously known as “vaults.” Ordinarily, loan protocols bring on board firms such as Gauntlet to guide and control risks. With MorphoBlue, risk manager's would now have the capacity to establish and control their own lending protocols.
The nature of borrowing and lending through Morpho contrasts with that of Aave’s, where lending pools are accountable to AaveDAO, the decentralized autonomous organization that governs the protocol. On February 21, Gauntlet’s co-founder John Morrow unexpectedly severed ties with Aave in a forum post, expressing challenges in traversing “inconsistent guidelines and unwritten objectives of the largest stakeholders.” Gauntlet had inked a contract worth $1.6 million with AaveDAO for a year just sixty days prior to the sudden separation. This move to partner with Morpho resolves a lot of speculation among DeFi market analysts who were unsure of Gauntlet’s strategy post-Aave.
Aave, reportedly trying to impede Morpho’s growth by launching a reward program termed Merit, was criticized by Morpho’s co-founder Paul Frambot. In his opinion, Morpho’s Blue protocol presents stiff competition to AaveV3 and CompoundV3 as it offers improved transparency in incentives and risk management for its users. Aave continues its reign in the DeFi lending marketplace with more than $9.3 billion in total value locked (TVL), while Morpho trails at $2.7 billion and $978 million, as per DefiLlama data.
Frambot expressed in a subsequent post on February 22nd that Gauntlet’s split from Aave was in fact, predictable. He attributed this to inadequately aligned incentives, struggles with cash flow scalability, and the marriage of politics and complex mathematics.
Source: MakerDAO’s strategy to revive ‘DeFi summer’ — Rune Christensen
Published At
2/28/2024 8:36:21 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.