SBI Holdings has led a $125 million Series C investment in Gauntlet, a New York firm that manages risk for onchain lending markets. It is SBI’s second move into decentralized lending in a month. In June the Japanese financial group participated in the $175 million fundraise for the Morpho Association, which supports the Morpho DeFi lending protocol where Gauntlet is one of the most prominent risk managers. Taken together, the two investments give SBI exposure to the largest institutionally flavored DeFi lending protocol and to a firm that sets the terms for a meaningful share of the capital deposited there.
Morpho is an overcollateralized lending protocol. Borrowers must post collateral worth more than their loan, and if the collateral value falls too far it is automatically liquidated. Unlike older protocols such as Aave, where governance votes decide which assets can be used, Morpho lets anyone create an isolated lending market defined by a single collateral and loan pair. The protocol has attracted around $11 billion in deposits.
Most lenders never touch those individual markets. Instead they deposit into vaults run by curators, who decide which markets to allocate capital to, what collateral is acceptable, and how much exposure to take. In traditional lending that judgment sits with a bank credit committee. In DeFi it has been outsourced to quantitative firms, and Gauntlet is among the best known of them, curating more than $1.5 billion in assets. Curators never hold customer funds, which sit in smart contracts, but their decisions determine the risk depositors are running.
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