Friday, September 30, 2022

Lending protocol Morpho Labs completes $18 million funding round

Lending protocol Morpho Labs has just completed an $18 million funding round. According to the announcement, the round, which was co-led by Andreessen Horowitz (a16z) and Variant, had about 80 other investors participating.

Morpho Labs to improve decentralized lending

The lender insists that the funding will be used to improve existing lending protocols, including Compound and Aave.

According to Morpho’s statement, the choice of investors for the round was based on more than the capital they could help raise. Rather, it had more to do with the extra value they could bring to Morpho as investing partners.  Part of the statement read:

“The breadth and diversity of this round are a fundamental asset to bringing efficient lending services to all.”

A few weeks ago, Morpho launched the Morpho-Compound protocol. And according to the company, the protocol has seen no less than $30 million in liquidity within such a short period. 

Interestingly, the new protocol has a liquidity pool model similar to that of Compound. But it also has the capital efficiency that comes with peer-to-peer matchings. This means that, although there are similar liquidation parameters and user experience, annual percentage yield (APY) will undoubtedly become higher.

Meanwhile, Morpho also claims that the Morpho-AAVE protocol will be ready in the next few weeks. And as Variant Fund general partner Spencer Noon says:

“If successful, we believe it has the potential to become a go-to coordination layer of a new global and decentralized financial system.”

In all, Morpho is looking to become a never-seen-before model of how a lending firm must operate. Firstly, matching suppliers with borrowers. And then, being in charge of lending pools, albeit in a typical way. That is, as just as it is before now with the likes of Aave and Compound. The only difference this time, however, will be that while in charge, Morpho will continue to unlock highly competitive rates.

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