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Morpho is an on-chain, peer-to-peer layer built on top of lending pools. It was launched in 2022 with initial support for Compound pools and subsequently for Aave. Lenders and borrowers enjoy better rates when supply and demand match on Morpho but otherwise get direct exposure to the underlying money markets.
Existing protocols like Compound and Aave are inefficient when utlitization is low. Borrowers pay higher rates and lenders receive lower rates than they would if they were matched directly. Morpho offers 100% utilitization while maintaining the liquidity offered by traditional pools.
Morpho's total value locked (TVL) quickly grew to over $100 million prior to the release of its governance token, MORPHO. Multiple security audits have been conducted by respected auditors including Trail of Bits, Certora, ChainSecurity, and others. Morpho also maintains a bug bounty program.
The OUSD vault is currently holds one of the largest MORPHO allocations, but the token has yet to launch. Once transferrable, this allocation will be sent to the Origin DeFi DAO.
OUSD's Morpho strategy collects MORPHO tokens and collects and sells pass-thru COMP and AAVE. The resulting stablecoins are added to the OUSD vault and distributed as yield. The OUSD vault is currently one of the largest holders of MORPHO tokens, but they are currently locked and unable to be transferred or sold. OGV stakers will determine what to do with these tokens once they are eventually unlocked and transferrable.
OETH Morpho Aave strategy value flows for deposit and withdrawal