Risk Profit Loss Dice Charts Markets (Gino Crescoli/Pixabay)
The blockchain risk management firm Gauntlet has ended a four-year-long collaboration with Aave, a decentralized lending platform. The decision comes because of the challenges encountered while working with Aave’s decentralized autonomous organization (DAO), which governs the protocol.
In a post on the Aave forums, John Morrow, Gauntlet’s co-founder, announced the end of this partnership. He attributed the decision to the difficulties they faced while adhering to Aave’s inconsistent regulations and non-formalized objectives, representative of Aave’s larger stakeholders.
Gauntlet, a substantial participant in decentralized finance (DeFi), offers its risk management services to several large crypto protocols and DAOs. It acted as a “Risk Steward” for Aave, overseeing their risk levels, offering regular updates to Aave’s community, and manually adjusting specific lending and borrowing variables. Morrow indicated in his post that Gauntlet would start collaborating with other contributors to identify a replacement Risk Steward, thus ensuring the DAO isn’t left in a lurch.
Aave, initially launched on Ethereum in 2017 and since been extended to other ecosystems, is among the biggest decentralized lending platforms. The protocol has an incredible $11 billion locked within its system. A system that investors engage to lend and borrow cryptocurrencies sans intermediaries.
The collective term for holders of the AAVE token is the “Aave DAO”. They hold the responsibility of voting on crucial decisions directing the platform, such as dictating interest rates and risk management. Responsibilities like these are partly allocated to professional alliances like Gauntlet. Gauntlet handles certain operations on behalf of the DAO daily, interacts actively with the DAO community, and generates governance proposals for essential parameter changes.
Professional partners like Gauntlet receive payment from the DAO’s treasury and contracts are put forward and approved through formal Aave DAO governance votes.
The Aave community saw some members express immediate backlash towards Gauntlet’s decision of ceasing its relations with Aave.
“Personally I’m disappointed about the trust that the Aave DAO put on Gauntlet being broken in the middle of the engagement,” Ernesto Boado, Aave’s former CTO, said in a forum post responding to Gauntlet’s exit announcement. “I obviously respect the decision if other business considerations exist, but simply can’t agree that Aave mistreated Gauntlet.”
Marc Zeller, a major figure in Aave’s governance community who previously fought against renewing Gauntlet’s service agreement with the protocol, suggested Gauntlet was “looking into external business opportunities” and called its stated rationale for leaving the protocol a “poor excuse.” (Zeller’s characterization of Gauntlet’s motives was disputed in a reply from Nick Cannon, Gauntlet’s vice president of growth).
Gauntlet did not immediately respond to CoinDesk’s request for comment.
Edited by Bradley Keoun.
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Sam is CoinDesk’s deputy managing editor for tech and protocols. He reports on decentralized technology, infrastructure and governance. He owns ETH and BTC.
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