Key Takeaways
Today, we introduce Gauntlet USD Alpha (gtUSDa), a vault providing institutional-grade, risk-adjusted, real yield on stablecoins. Now available to all of DeFi.
Gauntlet USD Alpha on the Gauntlet App
“Institutional-grade” is thrown around a lot these days. Few in the space have the expertise across protocols, networks, and security posture. Even fewer have a track record of high performance over the long term. We aspire to deliver a strategy worthy of the name “Alpha” for every stablecoin holder in DeFi. All from the most vigilant, quantitative minds in crypto.
Capital allocators of all sizes can supply USDC to the vault, built on Base and accessible via the Gauntlet App. To start, we will support an opportunity set of Morpho vaults denominated in several stablecoins on Mainnet and Base. Rewards are automatically swapped to USDC and compounded.
We are just getting started. We will allocate to new variable and fixed yield opportunities across chains as opportunities present themselves. Supply and withdrawal transactions typically complete quickly but may take up to a few hours, depending on vault activity.
Want to see the full opportunity set of vaults and tokens the strategy can allocate to? We maintain the current list in our VaultBook.
Too many cowboys, not enough quants
According to vaults.fyi, there is over $20 billion in USD-denominated stablecoins deployed in 240+ yield opportunities across EVM chains in DeFi. Yields that swing wildly with APYs ranging from 1% to 25% or more, oftentimes significantly incentivized and paid out in part by protocol tokens. That’s not to say incentives are not important. Protocols depend on us to optimally distribute rewards to drive long-term growth. However, rewards create another layer of complexity for capital allocators, especially when they must be manually redeemed.
That’s 20+ protocols and 10+ chains, with over $250 billion in outstanding stablecoin supply. Allocators often face insurmountable hurdles to optimizing for the best stablecoin yields.
In general, we see the following issues with this universe of yield opportunities:
- Rebalancing: efficiently optimizing across chains for the best yield on a risk-adjusted basis costs time, effort, gas, and capital at scale. It requires an institutional-grade risk management system that is always-on, ready to adjust to drawdowns in negative market conditions and novel yield opportunities in good markets. In addition, because rewards incentivize material portions of APYs, reinvesting and compounding are more difficult.
- Not Institutional-grade: often memed, rarely proven - how many curators have a Head of Security? Few risk managers can say they have what it takes to build the kind of confidence that crypto-native and traditional institutions need to allocate onchain. Gauntlet’s risk models protect over $45 billion of DeFi TVL. We curate over $700 million in TVL across protocols, chains, and yield sources.
- Passive and therefore not opportunistic: most of the $20 billion in stablecoins is supplied to simple yield-generating opportunities. These may be appropriate for certain risk appetites, but generally cannot dynamically tap into a wider opportunity set as market conditions change.
DeFi deserves sustainable, institutional-grade onchain yield
We are known for managing risk for the most impactful protocols in DeFi, and more recently, because of our track record providing risk-adjusted yield through vaults on protocols like Morpho, Drift, Symbiotic, Katana/Vault Bridge, and Unichain.
Whereas our vaults cater to different users seeking yield across lending, restaking and levered ETH, and perpetual futures with varying risk tolerances, fragmentation prevents curators from tapping the full yield potential available in DeFi. This is what we seek to solve with Gauntlet USD Alpha.
Gauntlet USD Alpha has a wide variety of applicable use cases for crypto-native and traditional financial institutions alike:
- Asset Managers & Financial Institutions: Financial institutions interested in offering custom yield strategies directly to their customers.
- L1 & L2 Ecosystems: Protocols looking to bootstrap their DeFi ecosystem by offering native yield opportunities.
- Wallet Providers & Exchanges: Platforms with existing crypto-native user bases can integrate Aera vaults to offer their users seamless access to yield strategies directly within their familiar interface, enhancing user retention and engagement.
- RWA (Real-World Asset) Issuers & Platforms: Entities tokenizing real-world assets can partner with Aera to create yield-bearing products that combine RWAs with DeFi-native strategies. Check out our launch with Securitize and Apollo to see what’s possible.
Yes, we are eager for more crypto native and traditional financial institutions to supply capital to Alpha and DeFi, generally. That said, we built this vault strategy to be accessible to anyone and everyone in DeFi. Our cryptonative values informed how we built this vault. Our strategy is available to anyone in DeFi. This is no speculative points farming vault. We’ve been in this game long enough to know sustainability matters. Real yield matters. DeFi deserves better.
Want to keep up with the latest on the strategy and get alpha? Hear it first from us. Join Office Hours, our Telegram group and support line for vault capital suppliers. Have suggestions or ideas? Contact us: [email protected].
Beware of scammers. Gauntlet will never DM you first on Telegram, Discord, or other channels. Never reveal or share your seed phrase or private key publicly. Always verify you are reading information from official Gauntlet channels only.
Do you know how risk is managed on your yield sources?
Oftentimes, vault curators do not explain how they manage risk. Curators either have a risk framework they can clearly explain, or they don’t. Gauntlet USD Alpha manages across the following main risk parameters:
- Liquidity: large moves in/out of the strategy that may move rates or incur slippage on swaps and bridging
- Positions and collateral caps are tied to real-time DEX and vault liquidity
- Our risk management team monitors real-time data to optimize for yield but also to protect from long-tail risks as market conditions change
- Underlying token turnover is constrained by spot DEX liquidity (e.g. swaps for rebalancing must go through and not incur abnormally high costs/slippage)
- Stablecoin risk: risk-on stablecoins have a higher chance of a depeg.
- To mitigate this, we have a parameter set (40%) on the mix of risk-on vs. blue chip stables
- Smart contract risk: smart contract or oracle failures in Morpho or vault adapters.
- The universe of vaults we supply into follow strict risk management standards that we regularly update
- We also monitor health in real time
We impose systematic risk constraints to avoid undesirable positioning. Over time, these constraints will be refined and respond to market conditions:
- Vault position sizes are constrained by vault and DEX liquidity in the underlying token
- Aggregate exposure to vaults denominated in non-blue-chip stablecoins is limited to 40% of the Gauntlet USD Alpha strategy portfolio
- Collateral exposure is constrained by DEX liquidity
- Token turnover is constrained by spot DEX liquidity to minimize market impact and maximize realized yield
Reintroducing The Gauntlet App
We designed the Gauntlet App to give everyone, from whales to first-time DeFi allocators, access to the metrics that matter most.
Gauntlet USD Alpha on the Gauntlet App
Performance tracking:
- View your balance, earnings, and ROI in real-time
- Track vault performance, including TVL, allocations, and position history
- Access complete supply and withdrawal history with full transparency
Beyond Gauntlet USD Alpha, discover other yield opportunities across lending, restaking, perpetuals, and more accessible through the Gauntlet App ecosystem. The app represents our commitment to transparency and user control. You shouldn't have to trust us blindly; you should be able to verify our performance and understand precisely how your capital is being deployed.
The backtest
Institutional capital allocators typically review a backtest: a quantitative evaluation of how a strategy would have performed in past market conditions. We’re excited to make this information available for Gauntlet USD Alpha.
The backtest evaluated the initial strategy: a mix of Morpho vaults across Mainnet and Base with reinvested rewards for one year (to September 1, 2024) and 30-day relative performance. The benchmark consists of the USD yield opportunities tracked by vaults.fyi.
- Vaults.fyi benchmark: 6.75% annualized APY since start, 4.48% t30d annualized
- gtUSDa: 11.02% annualized return since start, 7.76% t30d annualized
We will continue to provide updates on strategy performance over time. Institutional capital allocators can contact us to learn more about this backtest and how to integrate Gauntlet USD Alpha into your protocol, app, or portfolio strategy.
Looking forward
Gauntlet USD Alpha represents more than just another yield product — it's our vision for how sophisticated yield optimization should work in the mature DeFi ecosystem. We're building the infrastructure to power the next generation of onchain financial services by combining systematic opportunity identification with institutional-grade risk management.
Traditional financial institutions are exploring DeFi integration, fintech platforms need scalable yield solutions, and sophisticated individual allocators want access to institutional-quality strategies. Gauntlet USD Alpha serves all these constituencies while maintaining the permissionless, transparent ethos that makes DeFi powerful.
Stay connected with us for alpha and more
- Visit our website to learn more and read our FAQs
- Follow Office Hours, our Telegram Alpha support channel
- See stats for all of our vaults in the Gauntlet App
- Learn more about this and other strategies from VaultBook
- Follow us on social: @gauntlet_xyz on X, @gauntlet on Farcaster, and Gauntlet on LinkedIn
- Oh, and keep up with the intern
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