Morpho Surpasses Compound in Total Value Borrowed on Ethereum
Morpho, a lending protocol built on top of Aave and Compound, has overtaken Compound in the total value borrowed on the Ethereum network. According to data from DefiLlama, Morpho crossed $903 million in total value borrowed on February 7, surpassing Compound’s $865 million. This achievement positions Morpho as a strong contender in the DeFi lending space.
Morpho’s Peer-to-Peer Approach Offers Attractive Rates
What sets Morpho apart from other lending protocols is its unique approach of matching borrowers and lenders peer-to-peer. This approach allows Morpho to offer more attractive rates for both borrowers and lenders. By reducing the amount of idle capital and actively lending it out, Morpho aims to generate higher yields and provide better borrowing rates for its users.
A Battle Against Aave and Compound in Deposited Crypto Assets
While Morpho may have surpassed Compound in total value borrowed, it still faces an uphill battle against Aave and Compound in terms of total value of crypto assets deposited. Aave currently holds over $7 billion in total crypto assets, while Compound has over $2.2 billion. In comparison, Morpho currently has $1.6 billion in deposits.
How Morpho Differs from Other Lending Protocols
Unlike traditional lending protocols where assets are deposited into a lending market, Morpho takes advantage of the rates and assets within Aave and Compound while also matching users peer-to-peer. This reduces the amount of idle capital and provides more attractive borrowing rates. When a peer-to-peer match cannot be made, Morpho routes the transaction to the underlying lending markets.
The Benefits of Peer-to-Peer Matching on Morpho
The peer-to-peer matching on Morpho offers significant advantages for borrowers and lenders. For example, on Compound, the rates for the popular stablecoin DAI are 5.75% for lenders and 8.34% for borrowers. However, on Morpho’s peer-to-peer matching, the rate for both borrowers and lenders is 6.61%, which is better for both parties. These percentage differences can translate into substantial savings, especially for large investors.
MORPHO Tokens and Future Financial Value
Users of Morpho are rewarded with MORPHO tokens, which currently can only be used for governance and cannot be traded. However, there is potential for these tokens to hold financial value in the future. As stated in the Morpho documentation, token holders may vote to enable trading at any point, which could create additional opportunities for token holders.
Stay informed with DL News’ New York-based Data Correspondent, Ryan Celaj. Contact Ryan at ryan@dlnews.com for tips or insights in the DeFi and lending space.
Analyst comment
Positive news: Morpho surpasses Compound in total value borrowed on Ethereum, positioning itself as a strong contender in DeFi lending. Peer-to-peer approach offers attractive rates for borrowers and lenders. However, Morpho still faces competition from Aave and Compound in terms of total value of crypto assets deposited. Morpho’s unique approach reduces idle capital and provides more attractive borrowing rates. MORPHO tokens may hold financial value in the future if trading is enabled. Market outlook: Morpho has potential for growth in the DeFi lending space, but competition from established protocols remains a challenge.
