Crypto borrowing and lending protocols & USC/stablecoin savings. The Genius Act.
@DeFi_Andree
Morpho is quietly winning lending MAU over the last 12 months. Over the past year:
257.1K monthly active users, 44% share
: 147.5K, 25.2%
116.8K, 20% 3 clean takeaways !
----- ❶ This is real distribution ▸ 44% MAU share means roughly 1 in 2 users across the tracked top lending apps interacts with Morpho each month. ▸ Sustaining that for a full year points to broad routing and repeat usage, not a one off spike. ❷ Winning top of funnel vs Aave ▸ Morpho runs at about 2.2x Aave’s MAU over this 12 month window. ▸ That usually shows up when integrations compound and the average user path is lower friction, often via vaults and strategies. ❸ The unlock is borrow depth ▸ User share alone will not crown a king. ▸ To credibly challenge Aave, Morpho needs this distribution to translate into deeper borrow liquidity, resilience through stress, and default routing from vaults, treasuries, and leverage venues. What I watch next: ▸ can Morpho hold the 44% MAU share ▸ do users convert into active loans growth and borrow depth ▸ does reliance on a few top markets or curators keep shrinking ----- ➥ If Morpho keeps owning users and turns that into depth, it is not just a lending app, it is becoming the lending rail.
Working in the crypto space, specifically defi, has transformed my perspective on debt and lennding
The common storyline is that taking on debt is bad: credit card debt, student loan debt, etc. But none of those assets are collateralized, that is the issue.
A mortgage is a great example of when society thinks its okay to take on debt because your house, ownership of your house, is the collateral. Issues start when your collateral loses value and is worth less than the value of the house. When your house is underwater, as they say. When your house is underwater, your house’s value drops and the ratio of your loan drops. When your loan is unhealthy, that’s bad.
**An underwater mortgage is when the value of the collateral, the house, is worth less than the value of your loan.
So even a collateral (house) backed mortgage, can become dangerous, if your home depreciates in value. There is risk. That said, in Tradfi, banks do not update home value in real time therefore there is no risk of liquidation, unlike in Defi, where oracles constantly update the price of the collateral. In tradfi, the issue of an underwater mortgage comes into play only when the house is being sold. In tradfi, the lender absorbs volatility. In defi, the borrower absorbs volatility.
Anvil is a protocol that is exploring this.
In the bitcoin space, this idea of using bitcoin as collateral to secure a loan is popular. But bitcoin is a volatile asset. So how exactly does it work?
Ethereum’s Aave protocol is kind of like that too. Where ETH is used as collateral for taking out let’s say USDC. But when the value of ETH drops, the health ratio drops too, and you can be liquidated which means your ETH will be sold.
You also need to pay interest, like on Rootstock’s Tropykus. So this whole thing becomes kind of weird because you need to pay interest. You have to pay interest always, all the time. In any borrowing/lending protocol you have to pay interest as a borrower and as a lender, you receive interest.
So in the case of Aave, for example, there is no bank. There are borrowers and lenders. I can lend USDC and earn interest or borrow USDC, pay interst, and collateralize with something.
Morpho is another defi protocol that has done quite well. Why??