Why Gauntlet is leaving Aave after 4 years as ‘risk steward’

Blockchain analytics company Gauntlet will terminate its work with open-source liquidity protocol Aave.

In a governance forum, John Morrow, the co-founder of Gauntlet, noted that the company was no longer able to continue its work with Aave.

“We will be terminating our payment stream as soon as possible and working with other contributors to find a replacement for the risk steward,” Morrow wrote.

Gauntlet was contracted as a market risk manager for Aave. Its team was designed to review mechanical designs while creating long-term economic and business modeling simulations for the protocol (in other words, be Aave’s “risk steward”).

Aave itself is a liquidity protocol that enables users to lend and borrow cryptocurrencies by posting collateral. Aave v3 is the largest DeFi lending protocol today, with a total value locked (TVL) of $9.5 billion, according to DeFiLlama.

Morrow noted many things had taken a turn over the past four years working with Aave. One example given was that the team found it difficult to navigate inconsistent guidelines and undocumented objectives from the largest Aave DAO stakeholders.

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In particular, Gauntlet said it faced criticism from Aave delegates when looking for assistance in distributing ARB emissions to Aave users. Aave delegates meanwhile gave the opposite reaction to another risk steward, Chaos Labs, in response to a proposal to work with Optimism.

The team said it received criticism over allegedly “moonlighting for direct competition” for an economic audit conducted by its Applied Research team, though similar standards were not held when Chaos Labs partnered with Aave forks.

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In response to Gauntlet, Marc Zeller, the founder of Aave Chan Initiative (ACI), an Aave DAO delegate, told Blockworks that the work with Arbitrum had little to do with risk, something that Gauntlet was brought on to do.

“When Chaos had the same kind of engagement with Optimism, their reaction was to discuss and coordinate with the relevant service providers and set up a multisig with Finance, ACI and them to implement necessary changes,” Zeller said.

Zeller said Gauntlet would invoice Arbitrum for services directly without coordinating with the Aave team, ruining synergies with third parties. Nick Cannon, the vice president of growth at Gauntlet, replied that the Gauntlet team knows and speaks to all service providers regularly.

“As mentioned in the forum we consulted many of them but none could oblige. This is not our core competency or a business line we are looking to get into but we’ll do it if it helps our clients,” Cannon said.

Gauntlet had recently renewed a $1.6 million contract with Aave following a governance vote. Its decision to leave this partnership was met with mixed feelings from the Gauntlet team, Cannon told Blockworks.

“We value the Aave partnership and are making some tough tradeoffs to voluntarily leave,” Cannon said.

Zeller, on the other hand, views this behavior as “unprofessional.”

“In [traditional finance], leaving a $10+ million client for the past four years without notice doesn’t exist and often has consequences,” Zeller said.

This sentiment was shared by Stani Kulechov, Aave founder and CEO of Avara, Aave’s parent company, who wrote in a Telegram group message that Gauntlet’s decision to leave Aave was “expected to happen.”

“The Aave community hasn’t been extremely happy with Gauntlet [from] what I’ve seen, unfortunately, hence no reason to stick around. Also opens room for a new contributor,” Kulechov wrote in a Telegram group message reviewed by Blockworks.

No clear offboarding process has yet to be determined, but Cannon notes the team will “ensure a smooth and transparent transition from the risk steward and multiple other active workstreams.”

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