Beyond the TVL: effective use of capital, real spreads, market depth, and optimization mechanisms, how to read which protocol delivers true value.
In 2025, the conversation no longer revolves solely around the TVL, which remains useful, but rather on capital efficiency: what percentage of the capital is truly deployed, what spread do markets retain between borrower and lender, how do interest curves react under stress, and what degree of operational interoperability do they offer.
In this practical comparison, we evaluate Morpho, Aave, and Compound using operational metrics (utilization, matching, modularity) and briefly discuss Ethena's role as an infrastructure player in the liquidity ecosystem.
TVL vs efficiency: first numbers to consider
TVL remains the most visible metric: Aave and Compound rank among the largest liquidity reservoirs historically, but Morpho has shown explosive growth in L2s like Base, consolidating significant volumes thanks to its role as an optimizer and interconnection layer.
On-chain dashboards and trackers like DeFiLlama reflect this recent expansion of Morpho across various chains.
However, to compare effectiveness we need to go further: look at utilization (borrowed/TVL), idle capital, and the net spread between the rate paid by borrowers and the rate received by lenders.
Morpho, due to its P2P overlay design and fallback to pools, tends to show better net spreads under normal conditions, as it directly matches supply and demand before resorting to general pools.
Utilization and depth: who deploys capital better
Aave: breadth of markets and large TVL give it depth; its pool model facilitates immediate access to liquidity, but its efficiency depends on the distribution among assets and the design of interest curves in each market. Public indicators in Aave V3 show that its multichain hubs aim to solve cross-chain costs.
Compound: remains a pillar of lending; its classic pool approach offers robustness, but with fewer native P2P optimization mechanisms to reduce spreads. New implementations (Compound Blue, integrations with Morpho) show evolution towards modularity.
Morpho: its operational advantage is the effective use: by directly matching lenders and borrowers (and using pools only as a fallback), it reduces idle capital and optimizes returns for both sides. Additionally, the design of vaults in Morpho Blue allows for risk isolation and liquidity concentration where needed, improving relative depth per market.
Operational costs and friction (gas, bundling, and multichain)
Efficiency is also measured in cost per operation: bundling, optimized gas, and off-chain orchestration reduce friction.
Morpho has worked on gas optimizations and L2 deployments (for example, on Base) to lower unit costs, improving net returns on small and medium deposits.
Aave, with its mature multichain presence, compensates with hubs and (upcoming) cross-liquidity solutions; Compound, for its part, prioritizes stability and simplicity of the contract.
Risk, modularity, and technical governance
Modularity, isolating vaults, parameters, and oracles, is a lever for efficiency: it reduces systemic risk and allows for fine adjustments by market.
Morpho V2 (intent-based, isolated vaults) was designed for this; Aave offers configurability at the market level; Compound follows a more conservative line but adapts through forks and collaborations.
Modularity allows Morpho to design highly efficient markets for institutional uses or specific sectors.
Ethena and monetary liquidity: why it matters in efficiency analysis
Ethena is not a pure lending protocol: it offers synthetic dollar instruments (USDe, sUSDe) that add a layer of native on-chain monetary liquidity.
Its role in the comparison is that of a monetary base provider that, when integrated with lending stacks, can improve stability and reduce friction in the provision of stable capital.
The availability of liquid monetary assets is an efficiency multiplier for any of the mentioned protocols.
Practical conclusion, what to look for if you are a curator, integrator, or investor
Real utilization (borrowed/TVL): more relevant than absolute TVL.
Net spread: measures the real value captured by users. Morpho often surpasses here due to its P2P matching.
Multichain depth and operational cost: gas and bundling affect net returns; L2s like Base have helped Morpho improve its net value
Modularity and governance: the ability to isolate risk and adapt parameters without affecting the whole = operational advantage.
In 2025, efficiency rules: Morpho has centered on optimizing operational capital with P2P designs, isolated vaults, and L2 deployments; Aave offers depth and ecosystem; Compound, historical stability. Judging by TVL today is a limitation: what matters is how much of the capital is truly working and at what cost.
