Gauntlet's Strategic Risk Management and Yield Optimization in Onchain Vaults

Gauntlet stands out as a leading quantitative risk manager in the crypto sector, utilizing sophisticated optimization strategies and risk models to safeguard billions within decentralized finance (DeFi). Its focus on onchain vaults—integrated with platforms like Morpho and Aera—has enabled it to generate risk-adjusted yields for a growing user base.

As of now, Gauntlet has allocated more than $1.5 billion across its strategies, benefiting over 50,000 users directly, alongside many others through partnerships. A key component of its risk and collateral valuation approach is the CoinGecko API, which provides reliable market data essential for informed risk analysis.

Key Performance Metrics

• $1.5 billion within Gauntlet's vault strategies serving over 50,000 users.

• The CoinGecko API supplies live figures for vault supply, individual allocations, and overall portfolio valuations.

Managing Risk in a Diverse Asset Ecosystem

In its quest for reliable collateral options for onchain vaults, Gauntlet must navigate a complex DeFi landscape, where asset values and liquidity can fluctuate dramatically. This complexity lies in the need for dependable data on established blue-chip tokens and emerging, less-liquid assets alike. Thus, a vault can switch from holding stable, liquid assets one moment to considering newer, riskier tokens the next.

Gauntlet's requirement for a single data provider capable of delivering comprehensive coverage without the hassle of aggregating multiple sources is magnified by its operational needs. They seek not just market prices but also insights into liquidity pairs and trading venues, particularly as they venture into novel assets like stablecoins, real-world assets (RWAs), and tokenized instruments.

The Decision for CoinGecko API

CoinGecko fits the bill with its extensive collection of market data encompassing both established and emerging cryptocurrencies, sourced from a mix of centralized and decentralized exchanges. This access allows Gauntlet to leverage CoinGecko programmatically, effectively integrating the data into their risk models and the Gauntlet App.

Operationalizing the CoinGecko API

The integration of CoinGecko data underpins Gauntlet's risk frameworks for both asset identification and monitoring. This data forms the backbone of what users see in the Gauntlet App.

Vault and Portfolio Valuation

Within the Gauntlet App, each vault presents its total supply in USD, together with net Annual Percentage Yields (APY), contributing to the Total Value Locked (TVL) across Gauntlet’s vaults. The API's /simple/token_price/{id} endpoint is efficient for retrieving token prices by contract address, allowing for streamlined valuation of various assets.

Total Value Locked and per-vault supply in USD

At the detailed level, the Allocations tab provides insights into how much capital each vault is investing in specific protocols and assets. Moreover, users’ Portfolio sections show the real-time dollar value of idle assets across different chains, offering visibility for potential vault allocations.

Capital allocated across underlying protocols and assets

Live USD value of assets held outside a vault

Historical Insights for Performance Tracking

Gauntlet employs CoinGecko's /coins/{id}/market_chart/range endpoint to garner historical price and market data essential for tracking users' position performances over time. This supports refining their strategies through meticulous backtesting.

Wallet value over time

Using contract addresses, Gauntlet can also pull specific historical data via /coins/{id}/history, which aids in evaluating the historical performance for a wide range of tokens.

Liquidity Assessment for Informed Risk Decisions

For new assets considered for vault collateral, Gauntlet taps into CoinGecko’s /coins/{id}/tickers endpoint to analyze liquidity distributions across various trading venues. This assessment helps determine whether an asset is supported by ample liquidity or is overly concentrated in a singular market.

The market price provided by CoinGecko serves as an independent benchmark against Gauntlet's on-chain oracle prices, signaling potential discrepancies that necessitate further scrutiny.

Impacts on Business and User Experience

The continuous access to programmatic pricing, historical data, and liquidity analyses equips Gauntlet to better evaluate new vault collateral. Additionally, its pricing infrastructure enhances ongoing risk monitoring, allowing for accurate assessments of market price versus oracle price, significantly reducing risk exposure.

Consistency in pricing for vault suppliers translates into stability in key metrics such as total TVL and portfolio balances, derived from a unified market perspective rather than a singular exchange’s view.

Looking Ahead: Gauntlet's Development Path

Gauntlet is set on expanding its vaults and the tech backbone that supports them. Its future plans include increasing the adoption of stablecoins and the integration of onchain RWAs, alongside exploring novel market categories like prediction markets and tokenized equities.

These endeavors will introduce diverse asset classes and trading environments, necessitating a broader market-data acquisition strategy. CoinGecko's vast coverage and depth across both established and nascent assets stands to bolster Gauntlet’s pricing and risk analysis as it forays into these new markets.

Connect with Gauntlet

Interested in enhancing your crypto project? Contact our API Sales team to discuss a tailored CoinGecko API solution for your enterprise needs.

This article was produced in collaboration with the Gauntlet team.