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Link: https://morpho.mirror.xyz/lendGLts2mSiS2lG-2puqnTyJFvYFmy5FHsH5dwrr6g | ||
Title: Gauntlet Joins Morpho | ||
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By Morpho Labs | ||
On 27 february 2024 | ||
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We are thrilled to announce that Gauntlet (https://www.gauntlet.xyz/), DeFi’s leading risk management firm, is joining Morpho. | ||
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Having worked with all the largest DeFi protocols, Gauntlet brings a wealth of capabilities to Morpho. Gauntlet will use these to curate various lending vaults on top of Morpho Blue using MetaMorpho. | ||
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Morpho Blue takes a fundamentally different approach to lending by externalizing risk management. Morpho Blue creates an open marketplace for risk management, enables diverse risk profiles, and establishes clear alignment between risk experts, users, and the protocol. | ||
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The Morpho approach is catalyzing a paradigm shift within DeFi lending, and Gauntlet joining Morpho further accelerates the transition. | ||
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- Gauntlet's Contribution to Morpho | ||
Gauntlet is a DeFi-native quantitative research firm specializing in risk management with $9 Billion in client assets protected. They use battle-tested techniques (https://www.gauntlet.xyz/product/gauntlet-risk-for-defi-protocols) from the algorithmic trading industry to help protocols manage risk. | ||
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Gauntlet will use their expertise to curate a series of MetaMorpho vaults on top of Morpho Blue and contribute the sophistication of the Morpho Ecosystem. The lending vaults will give users a simple and optimal way to earn yield on their assets. | ||
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Gauntlet works with an advanced team of quants used to trade in milliseconds and has always looked for faster paths to proactively manage risk and capture scalable growth opportunities. Morpho’s infrastructure presents the best option for Gauntlet and their capabilities. | ||
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- A paradigm shift for DeFi Lending | ||
Monolithic designs enshrine risk management into lending platforms. To scale, these platforms must list more and more collateral assets. However, the risk associated with each collateral is shared across the entire protocol, amplifying the overall risk exposure for users with each new addition. | ||
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On the one hand, a monolithic platform needs to enable as many use cases as possible by listing various collateral. On the other hand, the more collateral listings there are, the higher the overall risk borne by the protocol and users. This tension between growth and risk management makes it difficult to scale such platforms safely. | ||
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Morpho Blue steps away from the one-size-fits-all approach and removes the trade-off between growth and risk by externalizing risk management from the protocol. The separation creates an open marketplace for risk management, granting users the freedom to adopt or create a diverse set of risk profiles. More specifically, risk experts like Gauntlet can design and curate various lending vaults, reporting, and other products direct to end-users. | ||
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Importantly, the Morpho approach results in clearly aligned incentives between risk experts, users, and the protocol: | ||
- Risk experts provide value-add products such as automated lending vaults that do risk management for users. | ||
- Performance fees effectively align incentives among vault curators and depositors. | ||
- Products/services built by risk experts create a sophisticated risk-managed ecosystem that can be trusted with greater liquidity. | ||
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- Joining a cohort of top-tier risk curators | ||
Gauntlet joins a cohort of exceptional risk experts - Steakhouse Financial, Block Analitica, B.Protocol, and RE7 Labs - who are already curating vaults on top of Morpho Blue. | ||
Gauntlet’s capabilities will help scale the set of user-friendly lending vaults and grow liquidity on a common base layer that is Morpho Blue. |