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Gauntlet’s Tarun Chitra explains the keys to building a successful DeFi project

By on April 20, 2022 0

Gauntlet Network — a platform that provides risk modeling and performance optimization solutions for DeFi protocols – recently raised $23.8 million for a $1 billion valuation.

On June 24, 2020, when Gauntlet Network CEO Tarun Chitra first came on The Scoop, the total value locked across all DeFi verticals was just over $1.5 billion. Now, less than two years later, that number has grown exponentially to over $211 billion.

In this episode, Chitra describes his company’s rise to unicorn status and explains how a project in DeFi can succeed. According to him, it’s not just about replicating what exists in centralized finance and putting it on the blockchain:

“Products that work really well in DeFi aren’t just simple, ‘take centralized finance, create the closest possible clone, then try to get people to use it…’ that hardly ever works in DeFi. It’s still something that’s somewhat attuned to the nuances of cryptosystems and how people interact with cryptosystems in a way that’s very different from traditional finance or even centralized crypto.

Successful DeFi projects must manage what Chitra describes as the “monkey degen,” referring to crypto power users. These market players erratically move large sums of money into decentralized protocols without researching the underlying fundamentals of the protocol:

“And so what you find in DeFi in particular is that there’s almost this gladiator like competition between these different protocols and the capital allocated to them… If there’s any truth to the fact that their mechanism is working you should actually – whether or not it’s a really knowledgeable or perfectly rational investor investing their money in a protocol or if they’re a degen ape – you should basically get the same result.

DeFi protocols with billions of TVL currently rely on Gauntlet’s risk modeling for their operations, including Aave, a lending protocol whose founder and CEO Stani Kulechov recently share with The Scoop how the V3 protocol upgrade mitigates risk.

Over time, Chitra believes that more and more forms of contracts will fall under DeFi’s purview:

“I don’t think DeFi is really revolutionizing finance per se. I think it revolutionizes lawyers. You just get rid of lawyers for many transactions… Somehow in DeFi you can do these things like – tokenization means you can turn these things that were legal contracts into tradable assets.

During this episode, Chaparro and Chitra also discuss:

  • The “bridge paradox”
  • NFT and risk modeling
  • Crypto and the Scientific Method

This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Cross River
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