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Just days after parting ways with Aave , decentralized finance ( DeFi ) risk management company Gauntlet has entered into a partnership with DeFi lending protocol Morpho.
The partnership announced on February 27 involves Gauntlet creating its own lending product on MorphoBlue, a new protocol that allows companies to build their own pools of loans and borrowings called “vaults.”
Typically, lending protocols hire companies like Gauntlet to help advise and manage risk. However, MorphoBlue will effectively give risk managers the ability to create and manage their own lending protocols.
Morpho's borrowing and lending style differs from Aave, in that lending pools must be accountable to AaveDAO, a decentralized autonomous organization responsible for governing the protocol.
In an AaveDAO forum post on February 21, Gauntlet co-founder and chief operating officer John Morrow severed his company's relationship with Aave, citing difficulty navigating "inconsistent guidelines and unstated goals from the largest stakeholders."
This unexpected parting comes just two months after Gauntlet signed a one-year, $1.6 million contract with AaveDAO.
The move to partner with Morpho clears up a lot of confusion among DeFi market experts, with many wondering about Gauntlet's next steps after parting ways with Aave.
Morpho co-founder Paul Frambot criticized Aave in a Feb. 22 post, claiming that the protocol was "trying to prevent the growth" of Morpho by introducing a rewards program called Merit.
Frambot also explained how Morpho aims to compete with Aave and Compound - two companies that have historically dominated the DeFi lending space.
In Frambot's view, Morpho's Blue protocol is a direct competitor to AaveV3 and CompoundV3, offering more transparent incentives and risk management for users.
Aave remains the DeFi lending market leader with total value locked (TVL) of more than $9.3 billion, compared to $2.7 billion and $978 million for Morpho, according to DefiLlama data.
In a follow-up post on February 22, Frambot described Gauntlet's separation from Aave as inevitable, pointing to "misaligned" incentives, difficulties with cash flow scalability, and a combination of politics and complicated mathematics.
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About DeFi and Aave Cooperation
So that you understand the form of cooperation between DeFi and Aave previously, the following is explained for you in detail.
DeFi protocols like Aave often collaborate with other projects in the DeFi ecosystem to increase functionality, liquidity , and adoption. Here are some examples of collaboration between Aave and other DeFi projects.
1. Asset Integration
Aave often collaborates with other DeFi projects to integrate new crypto assets into their platforms. For example, they can integrate with exchange protocols like Uniswap to allow users to enter new assets into the Aave marketplace.
2. Lending and Borrowing
Aave can collaborate with other DeFi projects to provide cross-protocol lending and borrowing services. This allows users to use their assets as collateral to borrow from Aave and vice versa, or to leverage liquidity from other protocols to borrow on Aave.
3. Cross-Chain Integration
Aave can collaborate with DeFi projects on various blockchains to provide cross-chain services. This allows users to access Aave services from a variety of different blockchain platforms.
4. Product Innovation
Aave often collaborates with other DeFi projects to develop new and innovative products in the DeFi ecosystem. These can be products such as synthetic tokens, staking services, or various structured financial instruments.
5. Protocol Integration
Aave can integrate with other protocols in the DeFi ecosystem to increase its interoperability and functionality. For example, they can collaborate with oracle protocols like Chainlink to obtain accurate, real-time price data.
6. Improved Security
Aave may collaborate with other DeFi projects to improve the security of their platform. This could be collaborating on code audits, developing security guard systems, or sharing best practices in risk management.
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Also Read:
What is Composability in DeFi?
What is a Liquidity Pool in Defi?
DISCLAIMER : This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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