Paris-based on-chain peer-to-peer layer that rides atop of lending pools maker Morpho Labs has raised $18 million in a funding round led by a16z crypto and Variant. The capital will be used to further pursue the ambitions of the recently founded Association for the development of Morpho DAO.
Morpho uses a lending protocol that combines today’s de-fecto methodologies used in Compound or AAVE with P2P matching engines used in order books. The firm’s Morpho-Compound improves compound by providing the same user experience, the same liquidity, and the same liquidation parameters but with enhanced APY thanks to peer-to-peer matchings.
The Morpho-Compound offer has been live for “a few weeks” according to the company, and has, “already accumulated $30 million of liquidity.”
On the investment, Variant’s Spencer Noon commented, “Over the course of the past 3 years, decentralised lending protocols have shown incredible promise, as they have facilitated billions of dollars in loans and have been battle-tested in the face of extreme market conditions. However, despite their successes to date, these 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.”
Alongside Andreessen Horowitz and Variant’s lead, a host of additional investors including Bpifrance, Cherry Ventures, Coinbase Ventures, Semantic Ventures, Spark Capital, Fasanara, xAnge, and Project A all participated. On the angel investor side of the coin, names include Nicolas Bacca (Ledger), Aseem Sood (Uniswap), and Brianna Montgomery (FEI).