Morpho V2: An intent-based platform to power on-chain lending

Key Information

• Morpho V2 is built on a modular architecture composed of isolated vaults with customizable rules (assets, collateral, rates, maturities…).
• Users interact through intents: instructions that express their desire to lend or borrow under specific conditions.
• The execution of intents is delegated to solvers (or matchmakers), which seek the best possible execution by aggregating available opportunities.
• This architecture enables a complete separation between the expression of demand and its execution, improving user experience and market efficiency.
• Morpho V2 aims to attract institutional players and complex strategies (RWAs, derivatives, liquid staking…) by offering a more flexible and secure framework than traditional money markets.
• The protocol has already launched several vaults in partnership with players such as Gauntlet, Angle, and USDM (Mountain Protocol).

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Background on Morpho

Morpho is a decentralized lending protocol launched in 2021, offering an innovative solution in the on-chain credit space: a hybrid architecture combining the efficiency of traditional models (Aave, Compound, etc.) with peer-to-peer matching logic. This allowed users to obtain better rates than on the underlying applications while maintaining liquidity.

Morpho’s model quickly found its market. The protocol’s V1 surpassed $2 billion in TVL in 2023, establishing Morpho as a leading player in the lending sector. This initial version is now known as Morpho Optimizers, a non-custodial solution compatible with Aave and Compound, and still active today.

In 2024, Morpho reached a new milestone with the launch of Morpho Blue, a modular architecture allowing anyone to create an isolated lending market with their own parameters: collateral, borrowed asset, LTV, oracles, liquidators, etc. This layer turned Morpho into an infrastructure platform on which other protocols or institutions can build their own lending/borrowing strategies.

The launch of Morpho V2 in June 2025 is the logical continuation of this trajectory. This new version does not replace Morpho Optimizers or Blue, but complements them. It aims to provide a fully configurable lending experience, integrated with intent-based logic, and open to new use cases: RWAs, institutional loans, cross-chain, collateral bundles, and more.

Morpho thus becomes a three-pronged protocol:

• Morpho Optimizers: to enhance yields on existing pools
• Morpho Blue: to create modular isolated markets
• Morpho V2: to execute tailored loans via a global, fixed or variable market compatible with intents

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Overview of Morpho V2

Morpho V2 marks a strategic milestone in the protocol’s ambition to offer a unified solution for all on-chain lending. This new version is an intent-based platform, introducing a two-layer architecture: Morpho Markets V2 and Morpho Vaults V2.

Morpho Markets V2

“Markets V2” form the core of Morpho’s new architecture. It is a global peer-to-peer credit market based on an intent-based mechanism. In other words, all lending offers or liquidity requests are aggregated and processed by an execution engine centered around intents.

Note: Intents are a new approach to on-chain interaction design. Instead of performing multiple transactions, users express their intent to the system (e.g., swap tokens at the best exchange rate, find a lending offer at the best rate, etc.), and the system finds the best way to fulfill it. For more, see our full analysis on DeFAI and intents.

Unlike traditional pool-based models (where lenders deposit funds into a shared pool with a uniform rate), Morpho V2 relies on explicit lending offers, published on a global order book. Users can:

• Post a lending offer, specifying amount, rate, duration, repayment conditions, and accepted collateral;
• Or submit a borrowing request with their own criteria.

The protocol then executes these intents as soon as it finds an optimal match between supply and demand, enabling more efficient capital allocation.

This approach removes formula-based interest rate setting and enables true market-driven rate formation, while retaining the transparency, automation, and programmability of smart contracts.

Morpho Vaults V2

The second pillar of Morpho V2 consists of “Vaults V2,” configurable vaults designed to generate yield. These are primarily intended for strategy managers, third-party protocols, or institutions seeking delegated fund management.

Vaults V2 aggregate lenders' liquidity, which is then deployed into Morpho Markets V2 to execute loans that match predefined conditions, allowing for flexible capital management.

Each vault can be configured to:

• Lend under specific conditions (assets, rates, durations, risk profiles);
• Manage risk (borrower diversification, multiple collateral types, etc.);
• Reuse liquidity in other DeFi strategies.

This modular structure enables Morpho to meet a wide range of needs, from DeFi-native retail to institutional-grade requirements.

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Advanced Features of Morpho V2

Morpho V2 introduces a set of features designed to meet the needs of both DeFi-native users and professional or institutional players, which V1 could not fully address.

Intents and Solvers

The key innovation in Morpho V2 is the integration of intents. Users do not deposit directly into a market or smart contract, but instead express an intention (e.g., lend 10,000 USDC for 30 days at a minimum 5% rate against wBTC collateral).

Solvers-also called matchmakers-are then responsible for executing these intents by finding the optimal counterparty. This architecture enables:

• Better rate formation, as every offer/request is explicit;
• Smoother execution, potentially cross-chain;
• A clear separation between user logic (intent) and network logic (execution), simplifying the experience.

Solvers are permissionless but must comply with the protocol’s security constraints. They can be independent or integrated into frontends, bridges, or other DeFi apps.

Fixed-Rate and Fixed-Term Loans

Unlike Morpho Optimizers or classic lending markets which mainly offer variable rates, Morpho V2 enables the structuring of fixed-rate loans with defined maturity. This opens new use cases:

• Easier integration into institutional portfolios;
• Structuring of stable yield products for DAOs or funds;
• Interest rate risk hedging, aligned with traditional finance practices.

Maturities can be set at the intent stage, allowing all parties to align their strategies over consistent time horizons.

Advanced Collateral Management

Morpho V2 offers broad flexibility in defining acceptable collateral. While V1 only supported single-asset collateral, V2 now allows:

• Using multiple assets as collateral for a single loan;
• Depositing bundles of tokens, or even an entire portfolio, as collateral;
• Integrating more complex tokens (including RWAs or niche assets), provided they meet liquidity and oracle standards.

On-Chain Compliance Without Fragmentation

Current on-chain KYC solutions (via wrappers like kycUSDC) often lead to liquidity fragmentation between verified and unverified users. Morpho V2 offers a unified approach where a single lending offer can include compliance conditions without distinguishing by asset.

This allows lending to both verified and non-verified borrowers, depending on vault or market parameters, without duplicating assets or splitting liquidity.

Cross-Chain and Network Agnosticism

Morpho V2 is designed to be cross-chain, through a system of relayed intents executed on various EVM-compatible chains. A user can submit an intent from Ethereum and have it executed on Base, OP Mainnet, or any compatible network.

This unifies liquidity across environments while improving user experience.

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Adoption and Ecosystem Growth

Even though the full deployment of Morpho V2 is still ongoing, recent developments and partnerships confirm the rapid expansion of the Morpho ecosystem on multiple fronts.

• Crypto-collateralized loans via Coinbase: The US exchange now allows users to borrow USDC using their assets directly in-app, powered by Morpho.
• Launch of Morpho Lite: Morpho recently released Morpho Lite, a simplified interface with a clean, guided UX for beginner users.
• Integration with Safe{Wallet}: The leading multi-sig wallet now enables institutions and enterprises to earn yield via Morpho.
• New market openings: stETH via the ETHx/stETH vault, USDM in collaboration with Mountain Protocol, and EUR through the agEUR stablecoin by Angle.

On-chain metrics from May 2025 confirm this momentum:

• USDC supply on Morpho reached a new all-time high of over $1.3 billion.
• Crypto-collateralized loans via Coinbase surpassed $250 million in active loans.
• Morpho is used by Felix and Hyperbeat, two major protocols on HyperEVM, with over $200 million in cumulative deposits.

Additional recent integrations include:

• Deployments on new chains (Flame, Camp, Plume);
• Launch of thematic vaults (LevelUSD, Backed, Index Coop);
• Integrations into DeFi frontends (Rebind, Infini, Tab, Fluidkey);
• Strengthened partnerships with Yearn and Brahma, who are developing automated strategies and smart agents based on Morpho.

These developments confirm that Morpho is no longer just a lending protocol-it is emerging as a foundational infrastructure for on-chain credit, serving both native DeFi users and institutions alike.