What is Morpho? A plain guide to Morpho lending

Morpho is an open lending protocol: a set of smart contracts on public blockchains where people lend and borrow crypto assets without a bank or broker in the middle. Lenders earn interest. Borrowers lock up collateral and pay interest. The rules are written in code, and no company holds the money.

Morpho is built from two layers. At the bottom are small, separate lending markets. On top of them sit vaults, which spread deposits across many markets and are run by risk teams called curators.

Layer one: isolated markets

A Morpho market is a self-contained lending pool with exactly one asset to lend and one asset to use as collateral. A market that lends USDC against cbBTC, Coinbase's wrapped bitcoin, is a different market from one that lends USDC against ETH. A problem in one does not spill into the other.

Every market is defined by five settings. They are chosen when the market is created and can never be changed afterwards:

• Loan asset: what lenders supply and borrowers take out, such as USDC.
• Collateral asset: what borrowers lock up, such as cbBTC.
• LLTV (liquidation loan-to-value): how large a loan may grow compared with its collateral before it can be liquidated. See Morpho LLTV and liquidations explained.
• Oracle: the price source that values the collateral.
• Interest rate model: the formula that sets the borrow rate.

Apps usually write a market's name as the loan asset, the collateral asset and the LLTV, for example USDC | cbBTC (86%). Anyone can create a market without asking permission, but the LLTV and the interest rate model must come from short lists approved by Morpho governance.

This market layer went live in early 2024 under the name Morpho Blue. Morpho's documentation now calls these variable rate markets, and you will also see the name Morpho Markets V1. They are all the same thing.

Layer two: vaults and curators

Picking between hundreds of markets is hard work, so most lenders use a vault instead. A vault accepts one asset, for example USDC, and spreads the deposits across several markets that lend that asset. You receive vault shares in return, and their value grows as borrowers pay interest.

Each vault is run by a curator: a specialist risk team that decides which markets the vault may use and how much it may put in each. A curator cannot take depositors' money for itself, but its choices decide how much risk depositors carry. The details are in how Morpho vaults work.

There are two vault versions. Vaults V1, first called MetaMorpho, lend only into Morpho markets. Vault V2, launched on 29 September 2025, adds finer risk limits and can connect to other yield sources through plug-in contracts called adapters.

How Morpho differs from a pooled lender

Older lenders such as Aave work differently. Each Aave market is one large shared pool: many assets are supplied into it, most listed collateral can back loans of most listed assets, and governance sets and changes the risk settings for everyone. Morpho splits that pool into many small pieces and moves the risk decisions to market creators, curators and lenders.

Neither design is simply better. Isolation limits contagion, but it also splits liquidity into many smaller pots. There is a longer comparison on the Morpho vs Aave page.

Where Morpho runs

Morpho is deployed on many blockchains. The largest deployments are on Ethereum and Base, the network built by Coinbase. At the time of writing (September 2026), Morpho's documentation lists the core contracts on more than 40 networks, including Arbitrum, OP Mainnet, Polygon, Unichain, Katana and HyperEVM. Each network has its own markets and vaults, and money does not move between them automatically. The live list is on the networks page.

Who uses Morpho

People use Morpho directly through the Morpho app and other interfaces. More and more of its use comes through companies that build products on top of it:

• Coinbase has run its crypto-backed USDC loans on Morpho on Base since January 2025, and its USDC lending feature on Morpho vaults since September 2025. See Coinbase bitcoin loans explained and the Coinbase page.
• Robinhood launched an Earn product built on Morpho in July 2026, on its own network, Robinhood Chain.
• In its review of 2025, published in January 2026, Morpho also named Crypto.com, Gemini, Société Générale FORGE and Bitget among the integrations launched that year.

When you use one of these products, the app handles the wallet and the transactions, but the loan or deposit itself lives in Morpho's contracts and follows the same rules as everyone else's.

Governance, fees and the MORPHO token

Morpho governance is run by holders of the MORPHO token, who vote on proposals. Its power over markets is deliberately narrow. It can approve new LLTV values and new interest rate models for future markets, and it can switch on a market fee of up to 25% of the interest paid by borrowers. It cannot change an existing market's settings or move anyone's funds. At the time of writing, Morpho's documentation states that no market fees are switched on.

Vaults are different: curators can charge their own fees on the vaults they run, within limits set in the vault code.

Variable rates, and fixed rates with Midnight

Morpho markets have variable rates that change with supply and demand. In 2026 Morpho added Midnight, a separate protocol for loans with a fixed rate and a fixed end date. It has its own guide on the Learn page, next to guides on interest rates, oracles, curators and risks.

The official reference for everything above is the Morpho documentation.