Blockchain analytics firm Gauntlet plans to end its relationship with decentralized lending protocol Aave, after serving as its independent risk manager since 2020, and cutting short its 12-month contract which was just renewed in September.
“We will be terminating our payment stream as soon as possible and working with other contributors to find a replacement for the Risk Steward,” said Gauntlet co-founder John Morrow in a governance forum on Wednesday.
Morrow said his team at Gauntlet had found it difficult to navigate the inconsistent guidelines and unwritten objectives of the largest stakeholders at Aave’s decentralized autonomous organization (DAO).
Some of the issues, according to Morrow, included duplicate proposals during the TUSD stablecoin offboarding process and criticism during Gauntlet’s request for assistance in distributing ARB token emissions to Aave users.
He also cited backlash from the DAO during Gauntlet’s research team’s economic audit, which shed light on the bed debt created in Aave after a pause in version 2 (V2) in certain markets after a security issue was identified.
At the time, Marc Zeller, the founder of the Aave Chan Initiative, and a significant contributor to the DAO’s governance process, criticized Gauntlet for being the “slowest service provider” and said there were many examples of how the entity was “difficult to work with.”
In response to Morrow’s governance post today, Zeller alleged that the reasons behind Gauntlet’s decision to leave was merely a poor excuse to justify a move to a more profitable and strategic alternative.
‘Marc has not been nice to us’ is a poor excuse to justify Gauntlet looking into external business opportunities. ‘we left because we were treated unfairly’ was likely deemed a better alternative than exposing itself to be seen as mercenary,” said Zeller.
Industry watchers had mixed views on the governance drama, with some arguing that the two parting ways would be a net positive for Aave, while others opined that it was an inevitable outcome.
Gauntlet leaving Aave was inevitable in retrospect.
Working as a risk consultant for DAOs is very challenging:
– Incentives are poorly aligned.
– Cashflow is very uncertain and not scalable.
– Politics get mixed with complex maths (not good and even risky if you ask me).— Paul Frambot | Morpho (@PaulFrambot) February 21, 2024
“Not surprising given the track record of certain influential groups within Aave governance ignoring sensible risk management suggestions and taking a combative stance toward service providers,” said one user on X.
