Risk Manager Gauntlet Quits Aave and Moves to Rival Lending Protocol Morpho

Risk Manager Gauntlet Quits Aave and Moves to Rival Lending Protocol Morpho

Less than a week after its high-profile split from blockchain lending platform Aave, crypto risk manager Gauntlet announced Tuesday that it's teaming up with Morpho, a rival decentralized lender.

Under the new plan, Gauntlet will create its own lending products – relying on a direct competitor to Aave called MorphoBlue, a service launched by Morpho in January that allows anyone to spin up a lending pool for a particular pair of digital assets.

"Gauntlet has decided it could better pursue its mission of making DeFi safer and more efficient by joining forces with Morpho, which endorses a layered risk management approach rather than the traditional monolithic approach," Gauntlet said in a statement.

Gauntlet was initially contracted to help Aave manage risk beginning in 2021, but Gauntlet co-founder John Morrow, made the surprise announcement last week that his team was splitting up with Aave because they "found it difficult to navigate the inconsistent guidelines and unwritten objectives" of the lender's "largest stakeholders."

While the abrupt breakup left some members of the crypto community scratching their heads, the Morpho news could help shed light on Gauntlet's decision to part ways.

Gauntlet will manage its MorphoBlue pools using a new feature called MetaMorpho, which allows "risk curators" (like Gauntlet) to create pools, manage their risk parameters, and earn associated fees.

From a risk management perspective, the Morpho model is designed to be more efficient than Aave's, and Gauntlet's embrace of Morpho could be viewed as a swipe at its old partner. But Gauntlet's rationale for switching allegiances may be clearest when viewed in strict business terms, since it offers the risk manager the potential to earn more money, with greater flexibility.

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