Brothers, dig out last year's DeFi lending track rankings, Morpho was still struggling at fifth place, with an 8% market share that looked frustrating; looking at this year, it directly surged to third place, with its share skyrocketing to 15%, only 2 percentage points behind the second place Compound! This year, Morpho has been like a cheat code, step by step robbing the market from big brothers like Aave and Compound, even Aave was forced to engage in 'staking mining subsidies', this comeback is more exciting than reading a feel-good story!
Around this time last year, I bet with friends in the circle, 'Can Morpho make it into the top four this year?' Most people thought it was unlikely. After all, Aave and Compound together accounted for 60% of the share, the third place protocol had 12%, Morpho only had 8%, and at that time everyone recognized the 'old brands' - once I recommended Morpho to Lao Yang, who had been in the crypto space for three years, he didn't even lift his head: 'Aave has been running for so many years without issues, what if the new protocol blows up?' This kind of 'fear of new, seek stability' mentality became the biggest obstacle for Morpho to seize the market early on.
01 The first wave of a comeback: The Blue network exploded, snatching 300 million TVL from Aave.
What truly allowed Morpho to 'break the deadlock' was the launch of the Blue independent network in mid-2024. At that time, Blue established several 'high yield + risk isolation' stablecoin markets, like the wstETH/USDC pool, which had an annualized return directly hitting 4.5%, 1.2 points higher than Aave's same pool. The key was that each market had independent risks, so there was no need to worry about other pools collapsing and affecting oneself.
My friend, market maker Old Wang, used to throw all his 100,000 USDC into Aave. After seeing Blue's policy, he first transferred 30,000 U to test the waters. A month later, he told me: 'Not only did I earn an extra $360 in interest, but I no longer have to worry about the neighboring pool exploding at midnight.' He then transferred the remaining 70,000 U over. During that time, the community was filled with screenshots of 'switching from Aave/Compound to Morpho,' Blue's TVL surged from 200 million to 800 million, and Morpho's overall share also rose from 8% to 11%, directly pushing the third place out!
02 The second wave of sprinting: The MetaMorpho vault is launched, attracting a large number of 'lazy users.'
If Blue is about 'grabbing professional users,' then the MetaMorpho vault launched at the end of 2024 is the killer tool for 'harvesting lazy users.' In the past, playing DeFi required daily market monitoring, manually adjusting positions and switching pools. I previously managed 50,000 U in Compound, spending 3 days a month researching which pool had higher yields, and in the end, the annualized return was only 3.6%; after moving to MetaMorpho, the system automatically allocated the funds across multiple quality pools, and the annualized return directly increased to 4.8%, without me having to manage it, allowing me to earn an extra $600 per year just by lying down.
I mentioned this in the group, and within a few days, five friends started transferring money. Among them, the newly joined Xiao Zhou was the most exaggerated; he used to think DeFi was 'too complicated to touch.' After using the vault, he showed me his earnings every day: 'It turns out DeFi can be as simple as Yu'ebao!' Relying on this vault, Morpho attracted a large number of 'new users' who previously avoided DeFi, with its share directly jumping from 11% to 13%, getting closer to the second place, Compound.
03 A direct confrontation: Aave implemented subsidies for counterattacks, and Morpho won with 'flexibility.'
But is there really a smooth sailing when seizing the market? At the beginning of 2025, Aave got anxious and launched a 'staking mining event'—an additional 1 point annualized yield on deposits, plus platform tokens. At that time, two friends around me were attracted back, telling me 'making a bit more is still worthwhile.' Morpho's share dropped from 13% to 12%, and I was a bit anxious, worried that the users I had worked hard to attract would run away.
As a result, Morpho quickly launched the 'Vault Earnings Enhancement Plan': no need for lock-up, directly sharing part of the earnings of institutional users with retail investors, the vault's annualized return increased by 0.8 points, and users could withdraw money anytime. This move was much more flexible than Aave's 'lock-up subsidy,' and the users who had left gradually returned. In less than a month, the share not only recovered to 13% but also surged to 15%! This operation made me realize: seizing the market is not about one-time subsidies, but about understanding users better than competitors—users want 'to earn more and have flexibility,' and Morpho just hit that point.
04 Looking now: Morpho is just 2 points away from second place, can it keep pushing?
Looking at the lending track rankings now, Morpho ranks third with a 15% share, just 2 percentage points behind the second place, Compound at 17%, and its growth rate is three times faster than Compound. Why can Morpho make a comeback? I think the key is that it has grasped two core points:
Using the Blue network to solve 'security anxiety': independent markets isolate risks, making it more reassuring than old protocols;
Using MetaMorpho to solve 'operational troubles': an automatically adjusted vault that draws in both newbies and lazy users.
In contrast, some old protocols either cling to old functions without upgrading or can only rely on issuing tokens to subsidize users, losing share at an increasing rate. When I talked to Old Wang, he said: 'Now, when institutions choose lending protocols, they prioritize looking at Morpho, not because it’s old, but because it dares to innovate and understands user needs.'
Do you think Morpho can surpass Compound this year and reach second place? Do you have friends switching from Aave/Compound to Morpho? Let's chat in the comments, and in 24 hours, we'll draw 3 people to receive (Morpho transfer strategy), which includes:
Steps for switching from Aave/Compound to Morpho (pitfall version);
Comparison table of yields between the Blue network and the MetaMorpho vault;
New features to watch for Morpho in 2025.
To be frank: the DeFi track does not lack established brands, but it lacks projects that dare to innovate and understand users. Morpho increased from 8% to 15% in a year, not due to luck, but by incorporating what 'users want: security, high yields, and convenience' into the product. At this rate, who knows, by this time next year, we might see Morpho competing with Aave for the top spot!
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