Variant Fund: Why we invested in Morpho again

On August 1, 2024, the cryptocurrency lending protocol Morpho (please refer to the previous article of Jinse Finance "Understanding P2P Lending Protocol Morpho ") announced that it had raised $50 million in a new round of strategic financing, led by Ribbit Capital, with participation from a16zcrypto, Coinbase Ventures, Variant Fund, Pantera, Brevan Howard, BlockTower and Kraken Ventures.

Variant Fund co-led Morpho's red-letter round of financing as early as 2022, and this time the strategic Variant Fund invested again. Variant Fund co-founder Jesse Walden and investor Geoff Hamilton subsequently jointly published an article to explain why Variant Fund invested in Morpho again. Jinse Finance 0xjs compiled.

Variant's vision is that encryption technology can achieve a fairer Internet - an Internet where users can become owners. DeFi is the financial infrastructure that enables this vision.

DeFi protocols facilitate the efficient allocation of capital and make financial instruments accessible to the widest possible user base without permission. At Variant, we invest in innovative and ambitious projects that expand DeFi’s capabilities, broaden its benefits, and strengthen its foundations.

Morpho is one of the leading projects we believe meets all of these criteria. Morpho is a lending protocol. It enables users to borrow and lend, create independent lending markets without permission, and build products (such as risk management vaults) on an immutable, decentralized infrastructure. In its v1 version, Morpho achieved economic efficiency improvements for borrowers and lenders by introducing the Morpho Optimizer for peer-to-peer matching. Subsequently, Morpho released Morpho Blue, a lending protocol with breakthrough design innovation that brings the advantages of the lending market to more assets and users. Moreover, Morpho Blue is more than just a lending market: it is a general infrastructure that can extend the benefits of decentralized finance beyond the boundaries of existing DeFi.

In 2022, Variant co-led Morpho’s seed round because we were excited by the team’s vision and believed the project had transformative potential. Today, we are excited to announce our investment in Morpho’s latest funding round. We are even more enthusiastic about the project than when we initially invested.

Since 2022, the team has exceeded our high expectations in every way. In the bear market, they have not only built and scaled one product, but also successfully launched two products that have found product-market fit. They have demonstrated that it is possible to build general-purpose infrastructure that drives the future of decentralized finance while meeting current market needs. In the process, they have contributed thought leadership to the space and have consistently committed to the fundamental values ​​of DeFi.

From the data, Morpho meets an important user need. The project has achieved $2.7 billion in total supply assets and $1.05 billion in total borrowed capital.Since Morpho Blue was launched six months ago, it has been warmly received by lenders, borrowers, and curators. Currently, more than 25 vaults are built on Morpho Blue, operated by curators including analytics firms, funds, and DeFi protocols. The diversity of these vaults and curators shows how the Morpho infrastructure can bring together a vibrant ecosystem and support a variety of products.

Looking forward, we see further growth potential in many dimensions. Morpho Blue has a lot of room to grow by adding new curators, vaults, and markets - further expanding the breadth and quality of user choice.

We are particularly bullish on Morpho as a general-purpose infrastructure. Morpho can support DeFi as it develops and matures. Morpho can also bring the benefits of its permissionless lending market infrastructure to areas beyond DeFi - including fintech and traditional finance. The scale of activities that Morpho infrastructure can facilitate is huge, and the potential benefits that Morpho can bring to users are equally huge.

It’s still early days for Morpho. We’re incredibly excited about the opportunities ahead and grateful for the chance to invest in this incredible project and team.