Gauntlet, a risk management firm focused on decentralized finance (DeFi), has formed a partnership with DeFi lending protocol Morpho shortly after its unexpected separation from Aave. The collaboration, announced on February 27, involves Gauntlet creating its own lending products on MorphoBlue, a newly developed protocol that enables companies to establish their own lending and borrowing pools called “vaults.” Unlike Aave’s lending pools, which are accountable to the AaveDAO, MorphoBlue empowers risk managers to create and oversee their own lending protocols.
The decision to join forces with Morpho resolves the uncertainty surrounding Gauntlet’s future direction following the split from Aave. Gauntlet’s co-founder and operating chief, John Morrow, publicly announced the separation on February 21, expressing challenges in navigating the inconsistent guidelines and undisclosed goals of Aave’s major stakeholders. This separation occurred just two months after Gauntlet signed a $1.6 million contract with AaveDAO.
Morpho’s co-founder, Paul Frambot, criticized Aave in a post on February 22, accusing the protocol of impeding Morpho’s growth through the introduction of a reward program called Merit. Frambot also outlined Morpho’s strategy to compete with Aave and Compound, the dominant players in the DeFi lending sector. According to Frambot, Morpho’s Blue protocol directly rivals AaveV3 and CompoundV3, offering greater transparency in incentives and risk management for users.
Aave currently holds the top position in the DeFi lending market with over $9.3 billion in total value locked (TVL), while Morpho trails behind with $2.7 billion, followed by Compound with $978 million, as reported by DefiLlama. Frambot addressed Gauntlet’s separation from Aave in another post on February 22, describing it as an inevitable outcome due to misaligned incentives, scalability difficulties in cash flow, and the complexity of combining politics and mathematics.
In other news, MakerDAO has unveiled its plan to revive the “DeFi summer,” according to Rune Christensen.