Morpho Lending Revolution: From TVL breaking $1.70 billion to token potential, interpreting the market's new favorite

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远山洞见2024/11/25 07:22

By:远山洞见

I. Project introduction

The Morpho protocol is a decentralized lending protocol based on the Ethereum Virtual Machine (EVM), providing users with trustless and over-collateralized cryptocurrency lending services. As an efficient lending primitive, Morpho supports permissionless market creation, allowing users to deploy simplified and isolated lending markets by specifying parameters such as collateral assets, loan assets, liquidation collateral-to-value ratio (LLTV), interest rate model (IRM), and oracle.

The design of this protocol aims to combine efficiency and flexibility. Compared with other decentralized lending platforms, Morpho improves users' capital utilization rate and reduces operating costs through its unique market isolation mechanism and low gas consumption. In addition, the protocol code is concise, with only 650 lines of Solidity code, which is easy to understand and has high security. Its non-upgradable and governance-minimized characteristics make the protocol durable and trustworthy.

Morpho is not only suitable for individual users, but also provides a friendly environment for developers. By allowing the free creation of asset markets, developers can build risk management or non-custodial income vaults on top of the protocol, providing users with more convenient passive income options. This flexibility makes Morpho have broad application prospects in the decentralized lending field, covering the diverse needs of individuals and institutions.

Morpho Lending Revolution: From TVL breaking $1.70 billion to token potential, interpreting the market's new favorite image 0

II. Project highlights

1. Steady growth in lock-up volume and market attractiveness

Morpho's total lock-up volume (TVL) has exceeded $1.745 billion, with a total loan amount of $1.055 billion, demonstrating its strong competitiveness in the decentralized lending market. In addition, the annualized transaction fee income of the protocol has reached $31.56 million, proving the sustainability of its business model and its ability to attract users.

2. Efficient capital utilization and flexible market design

Morpho adopts an isolated market mechanism, allowing independent clearing parameters (LLTV) to be set for each market, allowing suppliers to obtain the same market risk protection at higher collateral rates. This model significantly improves capital utilization while supporting permissionless market creation, covering multiple asset types, from traditional cryptoassets to real-world assets (RWA), greatly expanding the applicability of the protocol.

3. Code is concise, safe and reliable

The Morpho protocol is implemented with only 650 lines of Solidity code, with an extremely simple design that avoids the risk of vulnerabilities that may arise from complex architectures. The protocol adopts a non-upgradable architecture to ensure that its operating logic and rules are always transparent and stable, providing users with a long-term reliable infrastructure.

4. Innovative features and developer friendliness

The agreement supports fee-free flash loans, callback functions, and account abstraction, reducing the complexity and cost of user operations, providing powerful flexibility for advanced users and developers. For example, developers can build non-custodial income vaults or rich risk management tools based on Morpho, allowing users to passively obtain income and promote the development of a richer financial innovation ecosystem.

III. Market value expectations

Based on MORPHO's initial circulation ratio of 11.2% and current unit price of 0.731 dollars, we can refer to the data and growth potential of the benchmark project to calculate its potential value performance.

Benchmark project market value reference:

1. Base-based DEX and Liquidity Market Aerodrome ($AERO):

Unit price: 1.34 dollars

Market capitalization: $936.04M

If MORPHO reaches a similar market capitalization, the unit price of the token can reach about 8.36 dollars.

2. Decentralized lending protocol Aave ($AAVE):

Unit price: 168.8 dollars

Market capitalization: $2.53B

If MORPHO reaches a similar market capitalization, the token price could reach approximately 22.59 dollars.

3. Decentralized lending platform Compound ($COMP):

Unit price: 66.16 dollars

Market capitalization: $584.94M

If MORPHO reaches a similar market capitalization, the unit price of the token can reach about 5.22 dollars.

IV. Morpho Token Economics

The total supply of Morpho's native tokens is 1 billion, and the specific distribution is as follows:

Morpho DAO Reserve (35.4%)

Used for community governance, held by Morpho DAO. Community members can decide the direction of fund usage through voting, such as ecological funding and protocol expansion.

Users and Startup Pool (4.9%)

Allocated to early protocol users and startup pool participants, it will continue to be distributed in the future according to the reward model to incentivize the active level of the ecosystem.

Ecological Development Fund (6.3%)

Support the Morpho Association in promoting ecological development, including funding partners, contributors, and ecological expansion projects.

Contributor Reserve (5.8%)

Reserve tokens for Morpho Labs employees, service providers, and research institutions to incentivize future contributors to participate.

Strategic partners (27.5%)

Unlock according to the following plan:

Cohort 1 (4.0%): Three-year vesting period, 6-month lock-up, starting from June 24, 2022.

Cohort 2 (16.8%): Three-year vesting period, linear unlocking for 6 months after October 3, 2024, to be completed no later than October 3, 2025.

Cohort 3 (6.7%): Two-year linear unlocking, starting from May 17, 2025, and completed no later than May 17, 2028.

Founding team (15.2%)

Initial three-year ownership period with one-year lock-up, adjusted to two-year linear unlocking, starting from May 17, 2025 at the earliest and completed by May 17, 2028 at the latest.

Early contributors (4.9%)

Reward early contributors to the project, unlock plan includes: 3-year ownership period + 6 months lock-up, or 4-year ownership period + 4 months lock-up.

Token utility

MORPHO is the governance token of the Morpho protocol, and its main functions include:

Protocol governance

Users holding MORPHO can participate in protocol governance through Morpho DAO and use a weighted voting mechanism to determine the future development direction of the protocol.

Agreement changes and optimization

Users can vote on updates and improvements to the Morpho protocol, including the deployment of smart contracts, functional changes, and parameter adjustments.

Cost management

Holders can vote to control the fee switch (on/off) built into the agreement, which affects the revenue model of the agreement.

Treasury management

The treasury of Morpho DAO is governed by the holders, who decide how the funds are used for ecological funding, marketing activities, or other protocol expansion-related activities.

Through the above allocation and utility design, MORPHO not only undertakes the task of ecological incentives, but also ensures the decentralization and transparency of protocol governance, promoting Morpho's long-term sustainable development.

V. Team and financing

1. Team members

Paul Frambot: CEO, co-founder, responsible for overall strategy and leadership management.

Mathis Gontier Delaunay: Co-founder and research director, specializing in protocol research and development.

Merlin Egalite: Co-founder and important person in charge of promoting project development.

Julien Thomas: Co-founder and chief developer, responsible for protocol core development and technical architecture.

Oxloth: Development leader, managing development team and technical execution.

Evelyne Raby: Chief Financial Officer, responsible for the financial management and operational support of the project.

2. Status of financing

July 12, 2022: Received $18 million seed round financing from top institutions such as a16z, Variant Fund, Coinbase Ventures, Mechanism Capital, etc.

February 27, 2022: Received strategic round financing, led by Pantera Capital, to further promote the development of the agreement.

August 1, 2023: Received a new round of financing of $50 million, supported by Ribbit Capital, Coinbase Ventures, Pantera Capital and other well-known institutions.

VI. Risk Warning

1. Market volatility and liquidation risk

The Morpho protocol adopts an over-collateralized lending model. However, if the market fluctuates violently (such as a short-term sharp drop in the price of collateralized assets), the user's collateralized assets may not be enough to cover the loan, leading to large-scale liquidation risks. At the same time, rapid market changes may make the liquidation process unable to keep up with changes in asset prices, causing losses to the protocol or users.

2. Liquidity Risk of Isolated Markets

Although Morpho's isolated market design improves capital utilization, the liquidity of each market is relatively independent. If some isolated markets have insufficient liquidity, it may cause users to be unable to borrow or repay in a timely manner, especially when market demand increases or decreases rapidly, which may further exacerbate the liquidity shortage problem.

VII. Official link

Website：https://morpho.org/

Twitter：https://x.com/MorphoLabs

Discord：https://discord.com/invite/BWXbJMHMdz/

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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