The world runs on credit. It formed the earliest basis of money, helped societies evolve and labor to specialize, and enabled modern capitalism. Credit allows people with good ideas to build the future — and it delivers returns to capital, rewarding those who do. Productivity growth, fueled by credit, is why we can always have more and better. In a world changing rapidly due to AGI, access to credit is one of the few bottlenecks left standing in the way of even more prosperity.
We view the democratizing forces of onchain lending as the next frontier for credit, and a key node in the tech tree to human flourishing. An open credit network built on blockchain infrastructure could lower infrastructure costs, create a more competitive marketplace for credit, and provide greater access to capital and yield. That’s why we’re excited to announce we are, alongside Paradigm and Ribbit, co-leading $175M in financing in Morpho.
When we first met the Morpho team in 2022, it was immediately clear they were serious people. Despite still being in university Paul Frambot and his cofounders had hired most of the top blockchain talent in France. They were clearly technical experts, having invented an onchain lending optimizer that offered a Pareto improvement in interest rates by coordinating loans peer-to-peer on top of underlying peer-to-pool protocols.
Morpho was named for a genus of butterfly. Even at the beginning of the project, the founders aspired to metamorphose — not just themselves and their project, but the global financial system more broadly.
In 2024, Morpho introduced a new lending market protocol: Morpho Blue. It was structured similarly to repo and money markets, with floating rate variable term loans overcollateralized with crypto tokens, as has been typical of most onchain lending to date. But now Morpho is expanding beyond fully collateralized lending for crypto tokens as it moves toward a larger vision: to become the open credit network for the internet.
The next evolution is Morpho Midnight. The new protocol provides the opportunity for onchain term lending at fixed rates against traditional assets, with the tooling to support customizable KYC. Importantly, Morpho can also enable customers to launch their own lending markets, and still benefit from the liquidity and network effects of the underlying Morpho credit network.
Credit is essential to life as we know it, yet the way loans are originated and distributed has changed surprisingly little in traditional finance up to this point. One recent change is the shift to private credit since the Great Financial Crisis, driven both by regulation increasing the capital requirements on banks that reduce the potential for returns and by borrowers seeking a direct relationship with lenders instead of working through a loan syndicated or securitized by an intermediary.
We believe the time now is ripe for change and that this is the moment to disintermediate legacy systems and build a more open and efficient credit network for the world. We believe this is the time for Morpho, and it’s why we’re excited to partner with Paul and the entire team as they continue the work building the open credit network for the internet.
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