Morpho Labs Secures $50 Million: The Story of How Schoolroom Ideation Became a DeFi Disruptor

Morpho Secures $50 Million in Funding, Led by Ribbit Capital

In a significant stride toward revolutionising decentralised finance (DeFi), Morpho, a decentralised cryptocurrency lending protocol, has raised $50 million in a strategic funding round led by Ribbit Capital.

This round marks a pivotal moment for Morpho, positioning it to integrate more deeply into the fintech ecosystem and expand its innovative financial infrastructure.

Other major participants in the funding round include a16z crypto, Coinbase Ventures, Variant, Pantera, Brevan Howard, BlockTower, Kraken Ventures, Hack VC, IOSG, Rockaway, L1D, Mirana, Cherry, Fenbushi, Leadblock Bitpanda Ventures, Robot Ventures, and over 40 others.

This strategic investment not only reflects Morpho's potential but also links it with a broad network of fintech giants, setting the stage for future growth and integration.

What is Morpho?

Morpho stands out as a decentralised, noncustodial lending protocol implemented for the Ethereum Virtual Machine (EVM).

Its core mission is to fuse the world of decentralised finance with the foundational layers of the internet, creating an open, resilient, and value-driven financial infrastructure.

Morpho's protocols are designed to be layered, akin to the early internet, fostering open innovation and reducing barriers for integration.

This approach positions Morpho as a crucial player in the evolution of DeFi, aiming to transform private financial infrastructures into public goods.

The Humble Beginnings of Morpho

Morpho began when Vincent Danos, a researcher at CNRS, and Paul Frambot, a student at Télécom Paris, connected in class and conceived the idea for the project.

Their collaboration, which was further fueled by Paul's involvement with the student organisation KRYPTOSPHERE, led to the creation of Morpho Labs in 2021.

The team, initially composed of four second and third year students from Télécom Paris – a leading French engineering school specialising in digital technology and innovation, who balanced their studies and internships while developing the Morpho protocol.

Their efforts culminated in a successful initial fundraising round led by Nascent and Semantic Ventures, raising $1.35 million from over 30 different investors around the world to advance the project in 2021.

In the following year, Morpho Labs raised another $18 million in funding, led by Andreessen Horowitz (a16z) and Variant, with participation from 80 additional investors, providing the necessary capital to develop and refine Morpho's initial product, the Morpho Optimizer.

The Morpho Optimizer was an innovative layer built on top of existing DeFi protocols Aave and Compound, designed to improve interest rates for users through a peer-to-peer matching algorithm.

According to Spencer Noon, General Partner at Variant Fund:

“Over the course of the past 3 years, decentralised lending protocols have shown incredible promise, as they have facilitated billions of dollars in loans and have been battle-tested in the face of extreme market conditions. However, despite their successes to date, these protocols still don’t offer the most competitive rates to users. This is a major unsolved problem. Morpho is a brand new type of lending primitive that directly matches suppliers and borrowers and sits directly on top of lending pools like Aave and Compound, unlocking rates that are competitive both on and off-chain. If successful, we believe it has the potential to become a go-to coordination layer of a new global and decentralised financial system.”

This optimization not only benefited users but also demonstrated Morpho's potential to enhance existing financial systems.

Meet the Minds Behind Morpho Labs

In addition to Paul Frambot, Morpho Labs is spearheaded by co-founders Hugo Danet, Merlin Egalite, Julien Thomas, and Mathis Gontier Delauney.

Hugo Danet left the team in February 2022.

Paul Frambot (Co-founder and CEO)

His Socials: X | Linkedin | Medium

Paul Frambot is the CEO and Co-founder of Morpho Labs, a prominent DeFi platform known for its efficient and user-friendly lending solutions.

A member of Ethereum France, Frambot's journey into blockchain began with his Master’s degree in Parallel and Distributed Systems from the prestigious Institut Polytechnique de Paris.

Under his leadership, Morpho Labs has attracted significant investment, including an $18 million round in 2022 from top investors like Andreessen Horowitz.

At just 23, Frambot's innovative approach has earned him recognition as "Best Young Talent" at The Big Whale Awards 2024.

Merlin Egalite (Co-founder)

His Socials: X | Linkedin | Github | Mirror

Merlin Egalite is a co-founder of Morpho Labs, where he focuses on developing an open and resilient lending protocol.

He also serves as a Software Development Engineer at The Commons Stack, working on realigning incentives around public goods.

With a background in various tech roles, including at Kleros and Blockpulse, Egalite holds a diploma in computer science from CentraleSupélec, one of France's most prestigious and selective grandes écoles.

His diverse experience underscores his expertise in blockchain technology and software development.

Julien Thomas (Co-founder and Lead Developer)

His Socials: X | Linkedin

Julien Thomas is the Co-founder and Lead Developer of Morpho Labs, a leading DeFi platform.

He earned his Diplôme d'ingénieur (also known as the Engineer’s Degree) from the prestigious Télécom Paris and a Master’s degree in Data from Polytechnique Montréal.

Before founding Morpho Labs in September 2021, Thomas worked as a freelance web developer.

His technical expertise and leadership in developing Morpho Labs have been instrumental in driving the platform’s innovation and success in the decentralised finance space.

Mathis Gontier Delauney (Co-Founder and Head of Protocol)

His Socials: X | Linkedin

Mathis Gontier-Delaunay is the Co-Founder and Head of Protocol at Morpho Labs, where he has been pivotal since its inception in August 2021.

With an engineering degree from Télécom SudParis and a Master’s in Parallel and Distributed Systems from the Institut Polytechnique de Paris, he brings a strong technical foundation to his role.

Gontier-Delaunay is responsible for exploring and developing the Morpho protocol and programming its smart contracts, addressing critical security challenges to ensure the safe handling of funds and transactions on the blockchain.

The Evolution of Morpho: From Optimizer to Infrastructure

Since its inception, Morpho has evolved significantly, transitioning from its role as an optimisation layer to becoming a robust financial infrastructure.

The launch of Morpho Blue in October 2023 marked a significant milestone in this evolution.

Morpho Blue is a decentralised lending protocol that decentralises decentralised autonomous organisations (DAOs) and opens up markets for risk management and specialised financial products.

Within just nine months of its launch, Morpho Blue had amassed an impressive $1.52 billion in total value locked (TVL) by July 2024, illustrating its rapid adoption and the trust it has garnered within the DeFi community.

Morpho Blue represents a permissionless, resilient, and primitive lending protocol that allows the creation of immutable and efficient lending markets.

This infrastructure enables additional modular layers to be built on top, offering diverse risk profiles and more specialised forms of lending and borrowing while sharing the same base layer.

An example of this layered approach is Morpho Vaults, another layer of the Morpho Stack that empowers multiple independent operators to curate a wide range of scalable risk management strategies on top of Morpho Blue.

This innovative structure demonstrates Morpho's commitment to fostering open innovation and creating a resilient financial ecosystem.

What $50 Million Means for Morpho

The recent $50 million funding round led by Ribbit Capital, an early-stage investor in fintech firms such as Robinhood, Revolut, and Coinbase, marks a significant milestone for Morpho.

Morpho CEO Paul Frambot explained:

“We need to bridge the gap for DeFi and make the actual integration into the fintech world, and Ribbit was an obvious partner for that.”

This funding enhances Morpho’s ability to leverage Ribbit’s extensive fintech network, including companies like Robinhood and Revolut, to create flexible lending and borrowing solutions without fragmenting liquidity.

Other major participants, including a16z crypto, Coinbase Ventures, Variant, Pantera, and more, bring additional expertise and resources, reinforcing Morpho’s mission to transform financial infrastructure into public goods.

Morpho Token Distribution Overview

The Morpho Token (MORPHO) serves as the governance token for the Morpho Protocol, enabling holders to vote on protocol changes and manage the DAO Treasury.

With a maximum supply of 1 billion MORPHO tokens, the distribution as of August 2024 includes allocations for users through rewards programs, early contributors, and a reserve for Morpho Labs.

4.2% for users, 4.8% for early contributors

The token was initially non-transferable to avoid centralised decision-making and information asymmetry, with the possibility of transferability being controlled by the DAO.

This approach aims to balance control between users, contributors, and investors, promoting fair and sustainable decentralisation.

Roles within the protocol are defined to manage token transferability and governance, with distinct responsibilities assigned to different roles, including the Owner and Transfer Role.

Additionally, Morpho has recently initiated airdrop campaigns to further engage the community and distribute tokens.

Morpho x Safe{Pass}: Earn Up to 600K $MORPHO and Safe Points

The Morpho x Safe{Pass} campaign is now live, offering users a chance to earn up to 600,000 MORPHO tokens and Safe points.

Running from 29 July to 8 September, this initiative rewards Safe account holders who deposit assets into Morpho Vaults on Ethereum.

Safe{Pass} is designed to enhance Safe's smart accounts by integrating Morpho’s secure, risk-adjusted yield opportunities.

Users will earn rewards based on the value and duration of their deposits.

Existing Safe account deposits are eligible, and rewards will be claimable only after the campaign concludes.

To participate, deposit into Morpho Vaults via app.morpho.org or natively from app.safe.global.

Can Morpho Sustain Its Momentum?

As Morpho secures substantial funding and gains traction with innovative initiatives like Morpho Blue and airdrop campaigns, it faces the critical challenge of sustaining its momentum in an increasingly competitive DeFi landscape.

While its layered approach to decentralisation and its strong financial backing position it as a formidable player, the true test will be its ability to consistently deliver value and foster user trust.

Can Morpho overcome the inherent volatility and risks of the crypto market to solidify its place as a cornerstone of decentralised finance, or will it falter under the weight of its ambitious vision?