Gauntlet Quits As Aave Risk Steward Citing Clashes With Community

The risk management firm “will be terminating its payment stream as soon as possible.”

By: Pedro Solimano Loading...

image of someone walking out the door

Gauntlet co-founder, John Morrow, announced today the risk management firm will end its four-year relationship with decentralized finance (DeFi) lender, Aave.

“A lot has changed during the four years we’ve worked with Aave,” wrote Morrow today in a post in Aave’s governance forum.“In the past year, we’ve found it difficult to navigate the inconsistent guidelines and unwritten objectives of the largest stakeholders.”

The move means Ethereum’s largest DeFi protocol is now seeking a replacement to oversee key protocol parameters and decisions. The public resignation and debate around it is also a reminder of how differently decentralized autonomous organizations operate from traditional companies.

Aave is one of Ethereum’s largest DeFi lending protocols, currently handling $8.4 billion in total value locked, according to DefiLlama. Its market cap sits at $1.3 billion, and its native token, AAVE, trades for $89.74%, with a 3.7% drop on the day.

Criticism From Aave Community

The surprise move, which ends a $1.6 million agreement between the two parties, was mainly driven by criticism Gauntlet received from the Aave community for selling the company’s software to other protocols.

“The criticism referred to here is really just the assertion by members of the Aave community that we could not sell software or services to other protocols,” Morrow told The Defiant.

“We tried to work with stakeholders to clarify, but we couldn't find a path forward,” he said.

Aave did not immediately reply to a request for comment from The Defiant.

Morrow said the risk management firm clashed with Aave community members on numerous occasions. For example, Morrow said on the forum post, Aave token holders opposed Gauntlet’s proposal to distribute ARB emissions to Aave users, and criticized Gauntlet for working with Chaos Labs, which they called “direct competition.”

Slow Service Provider

One of Gauntlet’s staunchest opposers within the Aave community is Marc Zeller, founder of the Aave Chain Initiative (ACI).

His organization was against renewing Gauntlet’s engagement with Aave, claiming the risk management firm is “by far the slowest service provider.”

Gauntlet also “craftily” created a renewal proposal that would extract millions from the Aave DAO, Zeller said on Aave’s Nov. 2023 proposal to extend the engagement with Gauntlet.

According to Zeller, the ACI will always support a dual risk team DAO, and now awaits proposals from other risk management firms.