Gauntlet’s $2.3M contract renewal with Compound faces backlash

Similar accusations were made back in March, following the approval of a proposal to use competitor Morpho (for whom Gauntlet is also a service provider) to launch new markets on the Polygon network.

In the decentralized finance (DeFi) sector, projects are often run as decentralized autonomous organizations, or DAOs, in which token holders vote on key decisions such as protocol upgrades or hiring contractors such as Gauntlet.

Compound is considered one of the most well-established DAOs and has been credited with sparking 2020’s fabled ‘DeFi Summer’ by rewarding liquidity providers with its own governance token, COMP.

Skepticism over DAO judgement

In a blog post published on AlphaGrowth titled “The Death of DAOs,” Colligan alludes to the issues such conflicts of interest bring and claims, “If you’re a service provider trying to keep contracts alive, you can’t call out inefficiency without making enemies.”

Gauntlet previously toed this line a little too closely at DeFi lending giant Aave before eventually throwing in the towel and joining up with Morpho.

Aave governance delegate Marc Zeller is one of Gauntlet’s harshest critics and views its relationship with Compound as parasitic. Zeller says Gauntlet would likely “drain compound treasury to zero,” and that “the only way out for COMP holders is to hit the sell button.”