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Quantitative Research Firm Joins Morpho as Risk Curator
Quantitative research firm Gauntlet has recently joined Morpho, a trustless decentralized finance (DeFi) lending protocol, as a risk curator. Gauntlet specializes in risk management and will collaborate with Morpho to design transparent and automated lending vaults for users.
Morpho’s Approach to Risk Management
Morpho’s lending protocol, Morpho Blue, takes a unique approach by externalizing risk management from the protocol. This reportedly eliminates the trade-offs between growth and risk, creating a clear alignment between risk experts, users, and the protocol. Morpho Blue is designed as an infrastructure, allowing risk experts to build scalable products and services on top of a common base layer.
Gauntlet’s Role in Curating Lending Vaults
Gauntlet will curate lending vaults on Morpho using Metamorpho, an open-source protocol for permissionless risk curation built on top of Morpho Blue. These lending vaults combine the best features of isolated markets and multi-asset lending pools, providing users with a simple and optimal way to earn yield on their assets. Gauntlet brings its expertise in risk management, leveraging battle-tested techniques from the algorithmic trading industry, to curate various high-quality lending vaults.
Shortcomings of Current Lending Protocols
Gauntlet also highlighted the shortcomings of current lending platforms, claiming that many platforms tend to overexpose users to long-tail risk by forcing them into a one-size-fits-all risk profile. Morpho Blue addresses this issue by moving risk management to an open marketplace, enabling the creation of diverse risk profiles. Another challenge in DeFi lending is high costs, which Morpho’s approach aims to overcome by enabling open competition as curating a MetaMorpho vault is permissionless. This encourages risk curators to offer more effective and transparent services at a lower cost, benefiting users and promoting innovation in the space.
Morpho’s vision is to create a fundamental, trustless, and adaptable layer in finance, similar to how the Internet operates, enabling endless possibilities for innovation and customization in the decentralized finance landscape. It is worth noting that DeFi lending protocols have been one of the primary targets of hackers, as evidenced by recent exploits in the space.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
