Morpho Compound


Morpho is a peer-to-peer lending protocol that is built on top of third-party lending platforms. Users interact with Compound through Morpho's interface to receive improved rates for both borrowers and lenders.

Risk Rating
Protocol Code Quality
Protocol Maturity
Protocol Design
What we like
Morpho is a lending pool optimizer that is built on top of Compound. It improves the capital efficiency of lending positions by matching lenders and borrowers through a peer-to-peer model.
What we like less
Users are exposed to an extra layer of smart contract risk as they deposit into Morpho's set of smart contracts rather than depositing directly into Compound.
What it means for you
Offers users improved rates for both lending and borrowing while preserving the same liquidity and lending protocol parameters.
  • Website
  • Token: MORPHO
  • Tags: Lending
Key Metrics
  • TVL: $7.9M (Rank #137)
  • TVL Ranking by Lending: #25
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $7.92M
Risk Assessment
Protocol Code Quality
Protocol Maturity
  • Core protocol launched in 2022; maturity less than a year increases technical risk as smart contracts are less battle-tested
  • Top 20% by total value locked slightly reduces risk
  • Governance decentralization is in the roadmap
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No concerns identified
Things to know about Morpho Compound

How Morpho-Compound works

Morpho enables money market users to be seamlessly matched peer-to-peer when available. There currently exists a large spread in existing lending protocols as numerous lenders share the interests generated by a few borrowers. With Morpho, the yield is no long socialized. Instead, the supplied liquidity is matched peer-to-peer with borrowers on a come-and-go basis. Lenders' interests correspond to the interests paid by the borrowers they are paired with. Due to this, the protocol's lending and borrowing rates can be freely adjusted by Morpho but must stay within the spread of the underlying protocol's pool to be profitable for both parties. To match users, Morpho holds an on-chain priority queue that sorts users according to the amount they want to lend or borrow. When new lenders supply liquidity to the protocol, their liquidity is matched with the largest borrower first. And when new borrowers seek liquidity, their demand is first matched with the most significant lender. Overall, users who use Morpho receive in the worst-case scenario the yield of the underlying money market pool or an improved yield due to peer-to-peer matching. There is currently no interest-bearing token because each user has a non-fungible position (similar to Uniswap V3).

How Morpho-Compound makes money

Morpho is currently not generating any revenue. The protocol has the ability to turn on protocol fees through a future governance decision. Protocol fees would only apply to a cut of the improved peer-to-peer yield. This means Morpho will not take any fees if users are not matched.

How you make money on Morpho-Compound

You can deposit assets on Morpho to earn the base yield from Compound, or an improved rate based on the protocol's peer-to-peer matching engine. You also receive additional protocol incentives paid in MORPHO governance tokens.

Morpho Compound Pools