Today, we unveil Morpho V2—an intent-based lending platform powered by fixed-rate, fixed-term loans built to scale onchain lending into the trillions.

As DeFi welcomes sophisticated and institutional participants, these users demand more bespoke, predictable loan terms. Similarly, the ecosystem’s maturity has incited interest from major enterprises, actively seeking to replace legacy backend systems with modern decentralized protocols. Yet, current onchain infrastructure still forces compromises on both sides.

Morpho V2 addresses this with two core components—Morpho Markets V2 and Morpho Vaults V2—that build on principles of previous Morpho versions, such as immutable, permissionless, and externalized risk curation, while introducing several powerful new capabilities:

• Offered liquidity – users make offers instead of pre-allocating capital in liquidity pools.
• Market-driven pricing – open markets set interest rates, not fixed formulas.
• Flexible loan agreements – users can include bespoke terms such as long-tail collateral, multi-collateral, and portfolio-as-collateral without fragmentation.
• Fixed and variable rates – fixed-rate loans with variable-rate vaults built on top.
• Onchain compliance – KYC and whitelisting without fragmentation.
• Crosschain compatibility – supports seamless offers and settlement across chains.

In June 2022, Morpho began as an optimization layer built on existing lending protocols. By matching lenders and borrowers peer-to-peer, Morpho Optimizer improved capital efficiency and provided users with better rates.

Despite its success ($2B in total deposits in just over one year), two fundamental limitations became clear:

• Growth ceiling: Morpho could only become as large as a percentage of the underlying protocols.
• Foundational gaps: As the largest user of these lending pools, we realized they were not open, flexible, or stable enough to serve as a true foundation for onchain lending.

In late 2023, we outlined this in “Decentralized Brokers vs Protocols”, explaining why DeFi apps should evolve into general infrastructure that empowers builders to curate their financial products.

At the start of 2024, we released Morpho V1, which embodied our vision for foundational DeFi infrastructure. It featured an immutable, permissionless base layer and externalized risk curation that pioneered the concept of curators.

Fifteen months later, Morpho V1 is integral to the DeFi ecosystem with $6B in total deposits, 15+ active curators, and deployments across 18+ chains. It’s the first protocol directly integrated by a major enterprise like Coinbase, now issuing over $300M in bitcoin-backed loans. Multiple other leading distributors, including Trust Wallet, Binance Wallet, Safe, and Ledger, use Morpho to power their earn products.

Morpho’s vision, as outlined in “Price of Trust,” is to build an onchain system to price any loan.

This requires three key elements: creating open and competitive markets, enabling the expression of trust assumptions, and minimizing infrastructure impact on these assumptions. These elements create an unopinionated infrastructure capable of:

• Unlocking institutional capital: Fixed-rate, customizable lending terms can bring trillions of liquidity onchain.
• Empowering financial innovation: Builders can create entirely new categories of financial products previously out of reach, like fixed-rate loans for consumers.
• Unifying fragmented markets: Facilitate unified liquidity across chains, assets, and compliance requirements without fragmentation.

Driven by DeFi’s maturation, the market is now ready for Morpho V2.

Morpho V2 is an intent-based lending platform designed to realize this vision. It consists of two core components: Morpho Markets V2 (”Markets V2”) and Morpho Vaults V2 (”Vaults V2”).

Morpho Markets V2 is an intent-based primitive for peer-to-peer loans. Initially, the system will facilitate fixed-rate, fixed-term loans with customizable parameters, but it can be extended to support other loan types.

Key design considerations of Markets V2:

• Create an open & competitive market: All loan offers are broadcast to a single global market, ensuring users receive the best possible terms.
• Enable expression of intents: Lenders and borrowers can express bespoke loan offers with multiple conditions without fragmenting liquidity.
• Minimize trust assumptions: Permissionless and immutable infrastructure that executes loans without introducing additional trust assumptions.
• Piggyback on existing liquidity: For example, lenders can earn variable rates on Morpho V1 or other protocols while waiting for a loan offer to be matched on Markets V2.

Morpho Vaults V2 enables anyone to create vaults that allocate assets across any protocol to generate yield for depositors.

Key design considerations of Vaults V2:

• Future-proof: The ability to allocate to any protocol ensures that Vaults V2 are compatible with Morpho V1, Morpho V2, and Morpho’s future releases, including new types of loans.
• Instant liquidity & variable rates: Vaults offer instant liquidity for withdrawals and variable yields based on the allocation to fixed-rate loans (Markets V2), variable-rate pools (Markets V1), etc.
• Enhance curator differentiation: The option to invest across the Morpho ecosystem and the bespoke loans Markets V2 enables more differentiated strategies with unique risk profiles.
• Greater flexibility: Revamped role system and granular risk controls, including absolute and relative caps to manage exposure to collateral assets, oracles, and other factors.

Together, Markets V2 and Vaults V2 form a cohesive network with powerful new features that will unlock significant net-new demand for onchain lending.

• Offered liquidity: Traditional allocation locks liquidity into a specific market or condition, even if a user is comfortable lending to multiple different ones (Morpho V1’s Public Allocator partially addresses this, but has limitations). With Morpho V2, users can offer the same liquidity simultaneously across multiple conditions, enabling lending against unlimited collateral assets, multiple oracles, and optional whitelists without liquidity fragmentation or needing to bootstrap a market.

• Market-driven pricing: Traditional lending protocols use arbitrary formulas to determine the interest rate, which prevents dynamic price discovery. Morpho V2 allows lenders and borrowers to make offers with a specific price they would accept. This approach results in more efficient price discovery and rates accurately reflecting supply and demand.
• Flexible loan terms: Markets V2 enables a wider range of loans that Markets V1 cannot support. While V1 limits loans to single collateral types, V2 supports single assets, multiple assets, or entire portfolios as collateral, including RWAs and niche assets. Users can specify multiple oracles and LLTVs, plus optional parameters like whitelisting for KYC verification, compliance checks, or address restrictions.
• Fixed & variable rates: More borrowers demand fixed rates for greater predictability. However, fixed-rate protocols have historically struggled to offer sizable liquidity because many lenders value the ability to withdraw instantly. Morpho V2 offers lenders both options: instant liquidity and variable rates via Vaults V2 or fixed rates if lending to MarketsV2 directly, making it possible to attract deep liquidity for fixed-rate borrowing.

• Onchain compliance that works: Current compliance solutions fragment liquidity because wrapper-based KYC assets (kycUSDC) differ from standard assets (USDC). Morpho V2 eliminates the need to allocate between KYC’d or non-KYC’d borrowers, allowing lenders to make a single offer to borrowers with different KYC requirements and eliminate liquidity fragmentation.

• Crosschain compatibility: The proliferation of chains has fragmented lending liquidity and user experiences. Morpho V2 was designed to support crosschain lending, where the settlement chain becomes another parameter. For example, a lender could offer the same USDC liquidity across Ethereum, Base, and OP Mainnet, and borrowers decide which chain to settle on.

Morpho V2 is designed to complement, not replace, Morpho V1. Together, they create a synergistic ecosystem where users can choose their preferred approach—fixed or variable rates, specific duration or instant liquidity, minimal or bespoke markets.

Morpho V2 will launch via a phased rollout of the two core components, starting with Vaults V2 and then Markets V2, following completion of ongoing audits.

Vaults V2 has undergone three security audits completed by tier 1 firms: Spearbit, Chainsecurity, Zellic, with a final Cantina competition starting soon.

Markets V2 will enter a similar audit phase shortly.

If you are interested in building on Morpho V2, reach out directly.