Morpho is a decentralized finance (DeFi) protocol that operates as a layer on top of lending pools such as Compound and Aave. It is a lending pool optimizer that improves the capital efficiency of positions on lending pools by matching lenders and borrowers peer-to-peer, providing improved rates for both parties while preserving the same liquidity, liquidation guarantees, and risk parameters associated with the underlying protocol.

morpho protocol

Why one should use Morpho for borrowing and lending crypto?

Users may choose to use Morpho for lending and borrowing over directly using Aave or Compound because Morpho offers improved rates for borrowers and lenders.

Additionally, users of Morpho can receive two rates: the APY of the underlying pool in the worst-case scenario, and when matched, an improved rate called the P2P APY, which is always equal to or better than the rate of the underlying protocol.

This can potentially result in higher returns for both borrowers and lenders compared to using Aave or Compound directly.

Furthermore, by using Morpho, users can access both Aave and Compound liquidity pools simultaneously, which can increase their options for borrowing and lending.

Oh, did I say, while using the platform, you also get Morpho token.

What are the use cases of Morpho?

Morpho Protocol has several use cases in the decentralized finance (DeFi) ecosystem. Some of these use cases include:


DeFi protocols like Yearn and StakeDAO use Morpho to maximize their earnings or minimize user costs, without taking additional market risks.


Aggregators constantly try to find the best rates between different supply or borrow markets. Morpho’s interface is the same for Morpho-Compound, Morpho-Aave, and others, making it more friendly for integrators to have a single interface.


Decentralized stablecoin protocols use Morpho-Aave to keep the same liquidity and improve their rates without losing liquidity.


Anyone can interact with Morpho on a front-end like Individuals can supply assets to Morpho and start earning interest, or they can borrow stable coins against other assets as collateral to put the borrowed tokens to work in yield farming protocols.

Sophisticated users

Users can borrow to implement more complex strategies, like shorts or to build leveraged positions. Both of these kinds of users are likely to be interested in enjoying optimized rates for their trading strategies.

Morpho Funding

Morpho recently announced that it has raised $18 million in a funding round co-led by a16z Crypto and Variant. The funding round saw participation from 80 additional investors, including a mix of funds, founders, builders, and power users.

Notable investors include Coinbase Ventures, Spark Capital, Standard Crypto, Daedalus Angels, and many others. In addition to providing capital, each participating investor was chosen for the added value they could bring to the Morpho DAO, the shareholder-free entity that holds the intellectual property of the protocol and the funds raised. The diverse and extensive list of investors underscores the potential of Morpho to become a major player in the decentralized lending space.

Morpho APY

Currently, you can earn high APY for using Morpho.

Morpho APY

Morpho Onchain Analysis

Metric Value % Change
Total Value Locked $278.83m +30.43%
Borrowing Volume (Annualized) $94.60b +15.29%
Fees (30d) $1.18m +14.91%
Morpho TVL and fee

Source: Tokenterminal

The total value locked (TVL) in the Morpho protocol has increased by 30.43% to $278.83 million in the last 30 days, and the borrowing volume has increased by 15.29% to $94.60 billion annually.

In terms of usage, the protocol had an average of 26.53 daily active users over the past 30 days, which is very low. It is because we are very early with this project, and there is a long way to go. These daily users could be their investors themselves.

The best thing I like about this protocol is it generated $1.18 million in fees over the past 30 days, which represents a 14.91% increase from the previous period, and an annualized fee revenue of $14.37 million.

How to get Morpho token?

At the moment, you can’t buy Morpho token. One can only earn $MORPHO by providing liquidity to the Morpho-Compound or Morpho-AAVE liquidity pool. By depositing assets in this pool, users can earn interest on their deposits in the form of cTokens or aTokens, which can then be redeemed for the underlying assets plus interest.

Additionally, users who participate in liquidity mining programs, where they stake Morpho tokens, may be eligible to receive additional rewards in Morpho tokens.

It’s important to note that providing liquidity to decentralized lending protocols involves risks, including the risk of loss due to market fluctuations, impermanent loss, smart contract vulnerabilities, and other factors. It’s important to do your own research and understand the risks before participating.

Risks Associated with Morpho Protocol

There are smart contract risks associated with using the protocol. So, there is a risk of you losing the entire capital. Kindly DYOR before investing.

My take on Morpho

Morpho is an excellent defi protocol which I would definitely like to use. TVL of the protocol is gaining everyday. Current APYs are very lucrative, in some cases more than 80%. However, for any small investor, since the platform is only on ETH, because of the high fee, it may not be feasible for them to provide liquidity and earn the tokens. I feel if they had launched the same on Polygon or any other layer 2 platforms, more users could have used the platform. (May be that is what they did not want at their initial stage, haha).

Please note: You can’t buy or sell Morpho at this point, you can only earn it.