Hello, Seamless community,
Today, Gauntlet is pleased to announce an initiative between Seamless DAO, Gauntlet, and Morpho that promises to transform the lending experience for Seamless users. This collaboration brings Morpho’s innovative lending protocol to the Seamless ecosystem, paving the way for advanced lending vaults that offer versatility, risk-adjusted yield, and robust user capital efficiency.
Benefits to the Seamless Ecosystem
Expand the ecosystem’s growth and utility on Base to both isolated and shared-liquidity markets, increasing versatility to scale out in both verticals.
Introducing isolated lending markets allows for more competitive APYs and more competitive LTVs per asset pair, as well as faster listing of asset pairs without increased risk to existing markets.
Curated vaults allow suppliers to access professional risk managers offering risk-adjusted yield.
Morpho Vaults
Morpho is an open-source protocol for creating permissionless lending vaults. The Seamless USDC vault will launch via Morpho v1.1 vault infrastructure. Similar to v1.0, these vaults are ERC-4626-compliant vaults that accept supply and allocate funds across Morpho markets. However, with v1.1, these vaults can be safely integrated with DeFi protocols for various strategies.
Vault Structure:
About Gauntlet
Gauntlet solves DeFi’s most complex economic problems and provides economic research, market risk management, and quantitative optimization solutions to DeFi protocols, DAOs, and ecosystems. Gauntlet serves lending, perpetual, stablecoin, and other DeFi protocols facing market risk; and provides fee, incentive, and other optimizations. Gauntlet also designed and maintains the Aera protocol, a DAO treasury management solution. Our simulation models inform parameter decisions for protocols of all sizes, covering over 25% of aggregate DeFi TVL.
Gauntlet is now applying its years of research and expertise in curating vaults on DeFi’s largest lending protocols to Gauntlet Morpho Vaults, curating sophisticated risk-adjusted yield to vault suppliers.
Since March 2024, Gauntlet has been the leading vault curator on Morpho, currently managing over $600M of assets in its various vault products across Ethereum, Base and Solana.
Gauntlet Vault Strategies
Gauntlet offers multiple risk and yield-optimized strategies suited to supplier goals on both Base and Ethereum. Each strategy adheres to a defined risk tolerance in search of risk-adjusted yield, allowing users to select which strategies suit them best.
Gauntlet has 2 primary vault categories, each with their own risk profile.
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Gauntlet Prime Vaults offer risk-adjusted yield from very low insolvency risk strategies, with bluechip, highly liquid assets as collateral.
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Gauntlet Core Vaults offer smarter risk-adjusted yield, low insolvency risk strategies with a blend of bluechip and small cap assets as collateral.
Gauntlet Prime Vaults: Conservative Yield Strategies
Prime vaults offer conservative, low-risk yield options for users. Prime vaults allocate supply to maximize risk-adjusted yield while targeting minimal risk of insolvent debt even under extreme market conditions.
Prime vaults will supply where there are:
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A blend of super high liquidity Blue Chip collateral
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Markets with high price correlation between supply and collateral tokens
Some markets may be considered that do not meet these exacting criteria; however, where this is the case, the supply caps and LLTV rations will be very conservative.
Gauntlet Core Vaults: Competitive Yield Strategies
Gauntlet’s Core Vaults target smarter risk-adjusted yield, lending to a blend of large and lower cap collateralized asset pools while keeping exposure to any one asset within acceptable bounds. Collateral Selection is based on the following factors:
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Oracle validation
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Smart Contract Audit
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Sufficient liquidity and slippage to perform healthy liquidations in severe market conditions
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Active curation of vault supply to market supply ratios to ensure availability of withdrawal liquidity
Curated by Gauntlet
Extensive Due Diligence
Gauntlet’s vaults follow robust risk management guidelines to ensure resilience against market volatility. This begins with an extensive DD process evaluating the liquidity and security of all vaults and markets curated by Gauntlet.
Gauntlet goes beyond Risk Management, with a track record of effectively collaborating with partners to build opportunities for risk-adjusted yield in DeFi. Our deep experience and ties within DeFi provide us with insight into opportunities to grow sustainably in new markets within our risk frameworks.
Automated Risk Management Solutions
Gauntlet combines experienced risk manager oversight with sophisticated automatic risk rebalancing and risk-adjusted yield optimization strategies to ensure our vaults are optimally allocated to lending markets in all market conditions.
Our methodology incorporates sophisticated models for liquidity, price trajectories, and network congestion based on agent models and simulations that interact with smart contracts. We incorporate dynamic monitoring of the broader market liquidity of all collateral assets to ensure that profitable liquidations will continue in severe market conditions.
Our strategies have been proven during recent market crashes to automatically rebalance out of lending pools with increased risk profiles under the supervision of our experienced on-call risk management team.
Market Allocation Strategy
Market allocation is the most impactful action influencing vault composition, with a central role in defining a vault’s risk profile and overall APY.
To inform our allocation strategy, we use fine-tuned Agent-Based Simulations (ABS) that model market scenarios and user interactions within DeFi protocols. Our methodology incorporates detailed models for liquidity, price trajectories, and network congestion based on sophisticated agent models and simulations that interact with smart contracts.
When allocating to a market, there are three main actions we can take that impact a vault’s risk profile and APY:
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Adding a new market: When a new market is added and supply is allocated, the vault APY will change based on the allocation percentage and the supply APY rate outlined above.
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Adjusting market allocations: To ensure Gauntlet-curated vaults remain optimized for risk-adjusted yield, our models constantly review market allocations and make necessary adjustments.
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Adjusting market caps: The caps we set serve to limit vault exposure to any one market. A cap represents the total amount of supply that can be allocated to a particular market.
Depending on a vault’s risk profile, we make allocation decisions based on the factors outlined below.
Our Proposed Seamless Morpho Vaults
Gauntlet proposes to leverage our deep risk expertise and knowledge of the Morpho protocol to curate a series of optimized vaults in collaboration with the Seamless DAO
Initial vaults will support USDC, with the opportunity to launch other vaults, including cbBTC, WETH, and EURC, making risk-adjusted yield generation effortless for Seamless users. Our proprietary risk models, automated market allocation, stress-tested in production, will power dynamic allocation across Morpho markets to deliver the best risk-adjusted returns with enforceable on-chain risk limits.
Smarter Risk-Adjusted Yield with Gauntlet Core Strategy
The Seamless Morpho Vaults will follow our Gauntlet Core strategy, optimizing for risk-adjusted yield while keeping exposure to any one asset within acceptable bounds.
Seamless Morpho vaults and markets can be accessed through the Seamless DAPP as well as Morpho’s front end.
For Seamless Morpho vaults, we suggest the following role assignments:
- Owner: SeamlessDAO
- Curator: Gauntlet
- Allocator: Gauntlet
- Guardian: Shared Multisig between Seamless and Gauntlet
- 3/5 Threshold - 3 Seamless / 2 Gauntlet
Additional information regarding Morpho vault roles can be found in the Morpho Docs.
Seamless USDC Vault - Market Params
LBTC/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: LBTC - 0xecAc9C5F704e954931349Da37F60E39f515c11c1
Oracle: Morpho Oracle - 0x6e877ff82a5ed6cb4f4789c27d9f9b1d54388e4f
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 86%
SupplyCap: 8M USDC
cbBTC/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: cbBTC - 0xcbB7C0000aB88B473b1f5aFd9ef808440eed33Bf
Oracle: Morpho Oracle - 0x6e877ff82a5ed6cb4f4789c27d9f9b1d54388e4f
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 86%
SupplyCap: 10M USDC
wstETH/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: cbBTC - 0xc1CBa3fCea344f92D9239c08C0568f6F2F0ee452
Oracle: Morpho Oracle - 0xD7A1abA119a236Fea5BBC5cAC6836465cbe9289A
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 86%
SupplyCap: 10M USDC
cbETH/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: cbBTC - 0x2Ae3F1Ec7F1F5012CFEab0185bfc7aa3cf0DEc22
Oracle: Morpho Oracle - 0xb40d93F44411D8C09aD17d7F88195eF9b05cCD96
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 86%
SupplyCap: 10M USDC
weETH/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: cbBTC - 0x04C0599Ae5A44757c0af6F9eC3b93da8976c150A
Oracle: Morpho Oracle - 0xaacbD2BbCA7927F772145f99EC942024Ddd0FAB0
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 77%
SupplyCap: 5M USDC
WETH/USDC
Loan token: USDC - 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913
Collateral token: cbBTC - 0x4200000000000000000000000000000000000006
Oracle: Morpho Oracle - 0xFEa2D58cEfCb9fcb597723c6bAE66fFE4193aFE4
IRM: Adaptive Curve IRM - 0x46415998764C29aB2a25CbeA6254146D50D22687
LLTV: 86%
SupplyCap: 20M USDC
Next Steps
- Gauntlet is working with community members to provide next steps and updates.
The USDC Vault launch is a game-changer, and the added $SEAM incentives are the cherry on top 
. Can’t wait to see the impact on the 250k+ wallets already benefiting from Seamless! 
