Risk management company Gauntlet terminates partnership with Aave: Fed up with unwritten guidance and goals.

The risk management company Gauntlet recently announced the termination of its four-year partnership with the lending protocol Aave, citing difficulties in handling conflicting instructions among Aave DAO stakeholders and unwritten objectives. In response, the Aave team and community members have generally expressed criticism.

Gauntlet Terminates Partnership with Aave

John Morrow, co-founder of Gauntlet, announced yesterday in a post on the Aave forumarticle that the company is no longer able to continue its collaboration with Aave, citing difficulties in working with the Aave DAO behind the protocol.

Reportedly, Gauntlet is the market risk management team for Aave, responsible for reviewing protocol designs, monitoring reports, updating risk conditions, and envisioning long-term economic strategies and business simulations for the protocol, serving as an external "risk steward" for Aave.

What is Gauntlet?

Gauntlet is a risk management company specializing in the blockchain and cryptocurrency space. They primarily offer risk assessment and management services to help ensure the healthy operation of financial platforms within the industry.

As a significant participant in the DeFi ecosystem, their risk management services are utilized by various crypto protocols, including UniSwap, Maker, and Compound.

Specifically, their operations include regular risk monitoring, setting risk parameters and strategies, and optimizing protocol incentive programs to ensure liquidity and security.

On the other hand, as one of the leading lending protocols, Aave v3 boasts a Total Value Locked (TVL) of $6.1 billion, ranking sixth in the DeFi protocol rankings.

Understanding the features and processes of the flagship protocol Aave's governance module V3

Morrow: Unable to Tolerate Inconsistent Directives from Aave DAO

Facing the reasons for terminating the partnership, Morrow candidly expressed the challenges of dealing with "inconsistent directives and implicit goals among stakeholders of the Aave DAO," citing multiple examples.

One instance was when Gauntlet faced criticism from the Aave DAO for distributing ARB issuance to Aave users, as seen in this allocation, while the Aave DAO responded positively to a proposal involving another risk management team, Chaos Labs, collaborating with Optimism in this proposal.

Additionally, Morrow also mentioned the main reason for ending the collaboration:

The Aave community wanted exclusive services from Gauntlet without paying for them, which was a significant factor in the decision to part ways.

He added, "We will stop our collaboration and work with other industry professionals to quickly find a replacement for the risk management team."

Aave Suggests Gauntlet's Exit is Driven by Business Considerations

Soon after, Gauntlet's post sparked widespread backlash from the Aave community, with some members expressing disappointment in Gauntlet's decision.

Aave's former CTO Ernesto Boado and key community participant Marc Zeller also responded in the forum posts, implying that the company's decision was driven by business considerations:

I am disappointed that trust between Aave DAO and Gauntlet has been broken. I respect decisions made due to other business considerations, but I do not agree with the notion that Aave treated Gauntlet differently.

Some argued that Aave taking different actions and directives for different protocols and events is a normal occurrence:

Terminating a one-year contract with Gauntlet after several months of renewal will damage your company's reputation and raise questions about the intentions behind the decision.

Prior to this, Gauntlet had only recently, in November of last year, renewed a contract worth $1.6 million with Aave through a governance vote.