France: Morpho Labs Raises $18 Million for Decentralized Lending

Morpho Labs, a French research and software development firm, has raised $18 million to pursue its vision of a new decentralized lending protocol.

The funding round was led by Andreessen Horowitz (a16z) and Variant. The company states that approximately 100 investors participate in the funding round, including Nascent, Semantic, Coinbase Ventures, Cherry Ventures, Mechanism Capital, Spark Capital & Standard Crypto.

The additional funds will be used to further develop the “Morpho Protocol.

Morpho is described as an open-source, decentralized autonomous organization (DAO), allowing entities to borrow and lend cryptocurrencies. The protocol is based on the peer-to-peer (P2P) exchange model developed on already existing lending protocols such as Aave or Compound. Morpho states that its protocol enables  anyone to borrow or lend and generate interest without the need for an intermediary and with “unprecedented economic efficiency.”

The company’s principles are described as follows:

  • Making lending services a commons: The Morpho protocol is open source, so anyone can access the service. It will continue to spend resources to drive the adoption of the protocol. It manages the finances of the protocol with a non-profit philosophy.
  • Seek optimality: The Morpho protocol seeks to provide the most efficient lending services possible, either by funding innovation around the protocol or by eliminating unnecessary margins.
  • Achieving Sustainable Finance: Unlike many decentralized finance protocols, Morpho’s mechanisms are designed to be economically sustainable and self-sustaining.

Paul Frambot, co-founder of Morpho Labs, said they believe that decentralization is needed for resiliency and equity and to meet user needs:

” Our goal is for Morpho to become a true, community-driven DAO. Following Morpho’s launch a few weeks ago, the protocol has already accumulated $31 million in liquidity and has been joined by hundreds of contributors around the world.”

Investor Spencer Noon, GP at Variant, said that over the past three years, DeFi lending protocols have shown incredible promise, but existing protocols still don’t offer the most competitive rates to users.

“This is a major unsolved problem. Morpho is a brand new type of lending primitive that directly matches suppliers and borrowers and sits directly on top of lending pools like Aave and Compound, unlocking rates that are competitive both on and off-chain. If successful, we believe it has the potential to become a go-to coordination layer of a new global and decentralized financial system.”

The Morpho protocol was imagined by Paul Frambot while a student in Blockchain at Télécom Paris and Polytechnique and Vincent Danos, research director at CNRS,  during a research project. The two founders created Morpho Labs, an open-source software development company to build the Morpho protocol.

The founders have also created the ADMO association, which is said to be “committed to true decentralization.” ADMO is expected to lead Morpho towards further decentralization while eliminating single points of failure.

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