Moonwell Launches Two New Vaults On Morpho Blue

Decentralized lending platform Morpho continues to gain traction as it adds two new curated lending vaults by Moonwell, a lending protocol on Coinbase’s Layer 2, Base.

Moonwell, which leads the pack in terms of total value locked (TVL) on Base with $88 million, said it will add WETH and USDC lending vaults on Morpho.

The move comes as Morpho seeks to expand beyond Ethereum mainnet. According to DefiLlama, the lending protocol now boasts $1.8 billion in TVL, up 300% since the start of the year.

Borrowers have taken out $1.1 billion in loans on Ethereum.

The USDC and WETH vaults will offer users a way to earn risk-adjusted yields from over-collateralized lending, while other market participants can borrow both assets against other cryptocurrencies available on Morpho.

Combining Base, Moonwell, and Morpho has one builder extremely excited: Paul Frambot, CEO and co-founder of Morpho. He told The Defiant he believes “very, very strongly” about Base and that users are coming to Moonwell because the user experience “is insanely good.”

Frambot, in fact, reckons that Base is best equipped to onboard the next 100 million users into DeFi. “We believe in the team behind Base and also in the capacity of Base and Coinbase’s relationship,” he said.

While Morpho has been on a tear in 2024, Base is considered an even greater success. Barely one year old, the network has gone from non-existence at this time last year to $1.5 billion in TVL. The market capitalization of stablecoins on Base has reached a whopping $3.2 billion, of which USDC commands 96%.

Morpho Takes On Aave

In recent months, Morpho has quickly climbed the ranks of the decentralized lending sector.

According to DefiLlama, it ranks fifth by TVL, trailing Compound Finance, which has $2.3 billion, Spark with $2.9 billion, JustLend with $6.3 billion, and leader Aave with $11.9 billion.

Aave and Morpho have been previously embroiled in controversy after Frambot alleged that the former “was attempting to prevent the growth of Morpho by introducing Merit, a rewards program.” Additionally, one of Aave’s main risk management firms, Gauntlet, left the ecosystem and joined Morpho.

Morpho Labs touts itself as a new paradigm in the lending space by externalizing risk management through its latest iteration, Morpho Blue. The platform moves risk management to an open marketplace, enabling diverse risk profiles.

According to Frambot, Morpho is playing a different game long-term. While Aave “believes in one big monolithic ecosystem with a very narrow use-case of finance,” Morpho takes a holistic approach to the lending and borrowing sector.

“We’re building in layers, just like the internet,” he said.