Brothers, those who have deposited or borrowed money in DeFi before must have had doubts: I deposited 10,000 USDC and only got 3% annualized, why does someone borrowing this money have to pay 6% interest? Who exactly earned this 3% interest spread? It wasn't until Morpho changed the 'reservoir big pot rice' into 'on-demand delivery' that we discovered this part of the money could return to our own pockets — lending can earn 30% more yield, and borrowing can pay 20% less interest, this operation directly exposes the 'hidden costs' of DeFi lending!
Many people think that DeFi lending is just 'money goes into the pool, and the yield is calculated based on the interest rate', but in fact, it hides 'invisible intermediaries'. Traditional platforms throw everyone's money into a big reservoir, regardless of how much you want to earn or pay, they all calculate based on a unified interest rate, and the interest spread in between is entirely swallowed by the platform's 'unified mechanism'. For example, if you deposit 10,000 USDC, the platform gives you 3% annualized, and then lends it to others at 6%, the 3% in between becomes the platform's 'passive profit'. Morpho does not play this way; it directly changes the 'big pot rice' into 'on-demand delivery', and today we will break down how it helps us reclaim the interest spread.
01 The most practical change: match first, then return to the pool; less interest spread, more money.
The logic of Morpho is quite simple: you deposit money, and the system doesn't throw it into a big pool right away; instead, it helps you find matching borrowers in the 'matching hall'— for example, if you want to lend at an annualized rate of 4%, and someone is willing to pay 4.2% interest to borrow, the system directly facilitates a peer-to-peer transaction with almost no interest spread in between. If no match is found, the money is then thrown into the underlying pool (like Aave or Compound) for safety. This way, lenders can receive interest closer to what borrowers are actually willing to pay, and borrowers can pay less in costs.
Last month, I deposited 8000 USDC into Morpho. Previously, on other platforms, the highest annualized return was 3.2%. However, through matching, the annualized return surged to 4.1%, earning me an extra 5.8U in just over a month. My colleague borrowed 20,000 USDT, and on other platforms, he would have to pay 5.8% interest, but after matching on Morpho, he only paid 4.6%, saving 240U in a year. This is not a small amount; if you have 100,000 principal, you could earn nearly 1000U more in a year, which is much better than putting money in the bank. A friend who is a freelancer has now put all his liquid funds into Morpho, and just the interest covers his rent. He told me, 'I didn’t know the interest rate spread was making so much money before; now I understand that DeFi can be this profitable.'
02 The most reassuring design: risk remains unchanged, still the familiar 'safety framework.'
Many people worry that 'changing the model will increase risks,' but there’s really no need to be afraid. Morpho only changed 'who transacts with whom'; the core risk rules remain unchanged—the liquidation threshold, collateralization ratio, and which oracle to use are all based on the mature logic of the underlying platforms (Aave, Compound). How you judged risk before is how you still judge it; there’s no need to relearn new rules.
I previously borrowed USDC by collateralizing ETH on Morpho, and accidentally encountered a short-term spike in ETH. I thought I would be liquidated, but the system still followed Aave's liquidation rules and gave me time to top up my collateral, so I ended up not losing a penny. If I had switched to a new platform, the liquidation rules might have been different, and I would have panicked long ago. Moreover, the audit team wouldn't need to redo the risk control model; how they audited Aave before is how they still audit Morpho, maintaining compliance without compromise, so institutional users can confidently put large sums of money here.
03 The most considerate detail: segmented market management, risk does not spread.
Traditional platforms pool all assets together, and once a certain asset has a problem, the entire pool is affected. For instance, a certain platform collapsed due to a niche token, causing even the USDC pool to be drained. Morpho uses 'Morpho Blue' to break down each lending relationship into independent markets— for example, ETH/USDC is one market, and WBTC/USDT is another market, with independent rules for each market, preventing risk contagion.
I previously deposited money in the ETH market on Morpho, and later, when another niche token market experienced slight fluctuations, my ETH market earnings were unaffected; I received exactly what I was supposed to. This kind of 'segmented management' is so reassuring, without the fear of being 'collateral damage.' Moreover, institutional users can assess risks by treating each market as an independent 'contract.' For example, if a certain fund only invests in USDC-related markets, it doesn’t need to worry about fluctuations in other markets, focusing solely on its own area.
04 The most convenient upgrade: MetaMorpho Vault, even beginners can enjoy institutional-level strategies.
For ordinary users, the most appealing is still the 'MetaMorpho Vault'— packaging complex asset management strategies into simple products. You don't need to understand how to adjust positions or manage risks; just buy according to your share, equivalent to enjoying institutional-level management with retail money. For example, there is a 'conservative vault' that automatically balances funds across different low-risk markets, stabilizing annualized returns at around 4.5%. My mom, who doesn't even understand candlestick charts, checks her earnings every day after buying it and says, 'It's less stressful than buying bank wealth management products, and the returns are higher.'
In the past, if I wanted to do asset allocation, I had to research different markets and manually adjust positions, which was time-consuming and prone to errors. Now with the MetaMorpho Vault, it can be done with one click; the system will automatically optimize the allocation for you, and you can see the capital flow in real-time, transparent and reassuring. A friend who just got into DeFi made the interest from half a year in just three months through the MetaMorpho Vault. He said, 'If I had this thing earlier, I wouldn't have had to step in so many pits.'
05 Soul-searching question: Are you still paying for 'invisible interest rate spreads'?
In fact, many people lose out in DeFi lending not because they don’t understand, but because they don’t realize 'the interest spread is being quietly taken away.' The traditional platform's 'big pot' model seems simple, but it actually hides quite a bit of 'invisible costs.' Morpho's 'on-demand delivery' returns these costs to users, allowing lenders to earn more and borrowers to pay less, without taking on extra risks.
Have you ever deposited money in DeFi before? Have you calculated the difference between your earnings and the borrower's costs? If you haven't calculated, why not try Morpho and see how much more you can earn? Share your experiences in the comments, and in 24 hours, we will randomly select 3 people to give away the (Morpho Interest Spread Optimization Guide) to help you maximize your returns!
To put it frankly: DeFi should not make users pay for 'inefficiency.' The brilliance of Morpho lies in hiding the complex optimization behind the scenes, leaving the simple and affordable for users. It doesn't aim to eliminate anyone but rather to 'evenly distribute the cake' within the existing framework, allowing everyone to receive their fair share of profits. When choosing a lending platform in the future, don't just look at interest rates; see where the 'interest spread went'—after all, no one's money comes from thin air!
