Risk management firm Gauntlet has announced a strategic partnership with the DeFi lending platform Morpho. This collaboration, revealed soon after Gauntlet’s unexpected split from Aave, marks the launch of MorphoBlue – a new protocol that empowers firms to create their own lending and borrowing pools, known as vaults. MorphoBlue’s introduction is a major development in the realm of lending protocols, traditionally reliant on external risk management consultancy.
New Horizons in Risk Management
Breaking away from the typical consultancy model, MorphoBlue offers risk managers the tools to establish and oversee their lending products. This contrasts with existing protocols like Aave, which require lending pools to adhere to a decentralized autonomous organization’s governance. John Morrow, Gauntlet’s co-founder, cited the difficulties in dealing with Aave’s inconsistent directives and ambiguous goals as factors leading to their parted ways.
The separation from Aave follows a recently inked one-year, $1.6 million contract, making the rapid switch to Morpho a subject of much speculation and interest within the DeFi community. The new partnership aims to bring clarity and direction to Gauntlet’s endeavors in the DeFi sector.
Competition Heats Up in DeFi Lending
Morpho’s co-founder Paul Frambot publicly criticized Aave, accusing it of attempting to stifle Morpho’s progress. His critique focused on Aave’s introduction of the ‘Merit’ reward program. Frambot highlighted Morpho’s competitive strategy against established players like Aave and Compound, with Blue protocol offering more transparent incentives and effective risk management to its users.
Despite its recent challenges, Aave remains a leader in DeFi lending, with its substantial total value locked (TVL) dwarfing that of Morpho and others. Frambot suggested that Gauntlet’s departure was a predictable outcome, pointing to underlying issues of misaligned incentives and complex interactions between mathematics and policy.