Defi Risk Manager Gauntlet abandoned Aave and joined forces with rival Morpho.
Key Takeaways
Morpho founder Paul Frambot noted that this move is an important step in the paradigm shift underway within Defi.
Gauntlet creates lending products with the help of MorphoBlue, a direct competitor to Aave.
The world of cryptocurrency risk management is undergoing dynamic change, and recent developments herald a seismic shift in the landscape. Gauntlet, a prominent player in the space, made waves by announcing a collaboration with rival lending protocol Morpho shortly after parting ways with DeFi lending giant Aave.
Historically, risk management operated in a pull model within DAOs through other service providers, agents, and communities. At MetaMorpho, risk management is first-class citizen and draws directly from the markets. We expect to stress test our capabilities and… https://t.co/qoz8aKefjp — Gauntlet (@gauntlet_xyz) February 27, 2024
Gauntlet’s partnership with Morpho heats up with the launch of Morpho’s groundbreaking protocol that helps risk management professionals create and manage their own pools of loans and borrowings, called “vaults.” Under the new strategy, Gauntlet will develop its own lending products, using Aave’s direct competitor MorphoBlue for support.
Unlike the traditional model used by Aave, where AaveDAO manages a pool of loans, MorphoBlue allows risk managers to operate independently, creating and managing lending protocols according to their own risk parameters. Gauntlet’s decision to join forces with Morpho comes shortly after its unexpected split with Aave, which has left many in the cryptocurrency community intrigued and speculating about what’s next for Gauntlet.
The split, announced by Gauntlet co-founder John Morrow, was caused by difficulties navigating “inconsistent guidance and unwritten goals” from Aave’s biggest stakeholders. This development highlights the complexities inherent in risk management in the rapidly evolving DeFi environment.
Morpho co-founder Paul Frambot sees the collaboration with Gauntlet as an important milestone in the advancement of DeFi. He sees this as a more decentralized and flexible approach to risk management that moves away from the traditional protocol model governed by digital cooperatives called DAOs. These changes reflect a broader trend within the industry to empower participants and foster innovation.
Under the new partnership, Gauntlet will leverage Morpho’s MorphoBlue protocol to create and manage lending products. MorphoBlue’s innovative MetaMorpho functionality allows Gauntlet-like risk curators to set up loan pools, define risk parameters, and earn associated fees. This model offers greater efficiency and flexibility compared to Aave’s governance structure, which relies heavily on community voting for decision-making.
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