Morpho enters the top ten DeFi TVL: Negative interest rate lending mechanism drives capital inflows.
TL;DR
The Morpho protocol has successfully entered the top ten DeFi TVL rankings. As of December 11, 2025 UTC, its total locked value reached $6.327 billion , ranking 9th , a significant improvement from 13th place in December 2024. Its unique peer-to-peer matching mechanism and negative interest rate lending strategy, combined with multi-chain expansion, institutional adoption, and deep integration with Compound and Aave, drove TVL to double in 2025, attracting over $3.11 billion in lending funds.
Core Data Analysis
TVL rankings and size
As of December 11, 2025, the Morpho protocol has achieved the following milestones:
| index | numerical values | Remark |
|---|---|---|
| Total TVL | $6.327 billion | Ranked 9th among DeFi protocols |
| Ethereum Chain TVL | $3.051 billion | This accounts for 48.2% of the total TVL. |
| Base Chain TVL | $2.121 billion | 33.5% of total TVL |
| Other chains TVL | $1.155 billion | Polygon, Sei, Hyperliquid, Berachain, etc. |
| Total amount of loans | $3.11 billion | The agreement utilization rate is approximately 49%. |
Morpho achieved significant growth in 2025, climbing from 13th place in December 2024 to 9th place, becoming one of the fastest-growing protocols in the DeFi space. (x.com)
TVL growth trend
Recent fluctuations (December 1-11, 2025):
- Starting point: December 1st: $6.09 billion
- Peak on December 4: $6.28 billion
- Current value as of December 11: $6.327 billion
- Monthly increase: +3.9%
Full-year growth in 2025 :
- TVL has more than doubled from approximately $3-4 billion in December 2024 to the current $6.327 billion.
- Benefiting from the ecosystem incentive effect after the launch of the MORPHO token
- Total deposits surpass $10 billion , supporting TVL's continued expansion.
Assets and Chain Distribution
Asset composition (as of December 11, 2025):
| Asset Classes | Estimate TVL | percentage | Features |
|---|---|---|---|
| Stablecoins (USDC/USDT) | ~$3.8 billion | 60% | Institutional-grade stablecoin yield strategies dominate |
| ETH and packaged assets | ~$1.5 billion | twenty four% | Includes Ethereum Foundation Trust configuration |
| RWA and others | ~$1 billion | 16% | Leveraged positions with partners such as Apollo and Fasanara |
On-chain distribution characteristics :
- Ethereum : Mainnet liquidity hub, utilization rate 34-40%
- Base : Higher lending activity, utilization rate of approximately 47%, over $1 billion in active loans.
- Emerging blockchains : Sei receives $10 million in deposits in its first week; Hyperliquid becomes the third largest blockchain.
Negative interest rate lending mechanism
Technical Principles
Morpho's negative interest rate lending is not a negative interest rate in the traditional sense, but rather achieved through a negative net interest rate after incentive subsidies :
Operation process :
- Peer-to-peer matching engine : Prioritizes matching the largest lenders and borrowers, eliminating the supply-demand gap in the funding pool.
- Interest rate calculation : The P2P interest rate for matched positions is between the APY of pooled deposits and the APY of lending (determined by the governance parameter p2pIndexCursor).
- Incentive stacking : MORPHO token rewards and protocol emissions subsidies for borrowing costs
- Negative net interest rate : When incentive returns exceed accumulated interest, the borrower actually receives a net return.
Key advantages :
- Borrowers can offset their debt by manually claiming rewards, achieving low-cost or even negative-cost financing.
- Lenders receive returns equivalent to the borrower's interest rate, far exceeding the APY of pooled deposits.
- The liquidity backoff mechanism ensures that unmatched funds are deposited into the underlying pool (Aave/Compound).
Real-world examples
Current negative interest rate markets (as of December 11, 2025):
| market | Nominal lending rate | Net profit margin after incentive | mechanism |
|---|---|---|---|
| superOETHb/USDC | positive interest rate | negative interest rates | Origin Borrow Booster rewards Super OETH forwarding, with OP incentive bonuses (starting November 12, 2025) |
| dUSD Market (Katana) | 1.91%-6.65% | negative interest rates | dUSD reserve yield funding, combined with Yearn vault optimization (launching December 8-10, 2025). |
| cbBTC/USDC (Coinbase) | positive interest rate | Approaching zero or negative | Coinbase integrates incentives, with a market size of $1.15 billion. |
The negative interest rate strategy attracted arbitrage capital and institutional allocation, contributing over $1.6 billion in Vault TVL growth to the Base chain.
Analysis of Capital Attractiveness
Growth drivers
1. Protocol Integration and Migration
| Integration Events | time | TVL impact |
|---|---|---|
| Compound utilizes Morpho Blue infrastructure. | Q4 2025 | Polygon Vault launches USDC/WETH/USDT/WPOL marketplace, generating $50 million TVL in two weeks. |
| Seamless migrated from Aave v3 to Morpho | March 2025 | Drive Earn/Borrow functionality to attract liquidity migration |
| Coinbase DeFi Lend Integration | October 2025 | US users added $350 million in TVL, bringing the cbBTC/USDC market size to $1.15 billion. |
2. The organization adopts a partnership with RWA.
- Ethereum Foundation : Allocate 2400 ETH (approximately equivalent to $6 million stablecoins) to Morpho
- Traditional financial institutions : Apollo, Fasanara, Société Générale, Safe and more than 200 other institutions participated.
- RWA Leverage Returns : Partners contributed approximately $500 million in leveraged positions, with pre-deposits of $825 million.
- Enterprise-level services : Wirex business account revenue, Gauntlet risk management integration
3. Multi-chain ecosystem expansion
New blockchain deployment in October-November 2025:
| chain | TVL in the first week | Features |
|---|---|---|
| Sei | $10 million | High-performance public chain integration |
| Hyperliquid | Becoming the 3rd largest chain | Derivatives liquidity demand |
| Berachain | Through Bend fork | Emerging DeFi Ecosystem |
The multi-chain strategy drove a 20% increase in Q4 TVL across multiple chains, bringing the total TVL to the current level from $6.7 billion in August.
4. Profit Optimization and Security
- Planned Vaults : Third-party curators such as Steakhouse optimize returns, with some pools boasting annualized APY as high as 715%.
- Average daily cost : $383,288 (early December 2025), reflecting active lending activity.
- Regulatory Compliance : Following the SEC's clarification of rules in 2025, the KYC compliance V2 function will be launched.
- Institutional endorsement : Visa's white paper lists Morpho as a model for stablecoin lending, predicting a trillion-dollar market potential.
Community and Market Feedback
Key opinion leader perspectives :
| Influencers | Opinion | Quality assessment |
|---|---|---|
| @Nick_Researcher | I am optimistic about Morpho Vault being used for leverage on low-risk assets such as thBILL, which can achieve a cyclical return amplification. | High-quality analysis, focusing on risk-adjusted returns |
| @Kaffchad | Arbitrum views Morpho as the core of its capital rotation strategy, closely integrating it with the incentive cycle. | Practice-oriented, emphasizing liquidity efficiency |
| @0xAmberCT | Recognizing Morpho's potential for deployment in Katana, leveraging its mature ecosystem and competitive dynamics. | Ecosystem Analysis Perspective |
| @aixbt_agent | Questioning Morpho's fee avoidance strategies in some fork protocols, focusing on long-term economic sustainability. | Critical examination, risk awareness |
Community consensus :
- Positive sentiment prevails, with a focus on high-yield efficiency and strategic integration.
- Innovative use cases (such as Polymarket position lending) expand the user base
- Some voices are focusing on the impact of bad debt handling and exclusivity agreements on fees.
- As of December 11, 2025, the growth narrative revolves around partnerships, rather than controversial topics.
in conclusion
The Morpho protocol, thanks to its innovative peer-to-peer matching mechanism and incentive-driven negative-interest lending strategy, achieved a leap in TVL ranking from 13th to 9th in 2025, with a current total locked value of $6.327 billion. Its success stems from multi-dimensional synergy: deep integration with Compound and Aave drives liquidity migration; institutional adoption (Ethereum Foundation, traditional financial institutions) enhances trust endorsement; multi-chain expansion (Base, Sei, Hyperliquid, etc.) captures new markets; and the negative-interest-rate mechanism, through MORPHO token incentives and yield forwarding strategies, effectively reduces borrowing costs and even achieves net profits, attracting arbitrage capital and stablecoin allocation demand.
From a data perspective, Morpho's $3.11 billion lending volume, 49% protocol utilization rate, and daily fee revenue of $380,000 demonstrate its ability to balance yield optimization and capital efficiency. With clearer regulations in 2025, deeper integration of RWA, and trillion-dollar predictions from institutions like Visa for the stablecoin lending market, Morpho has established its leading position in the DeFi lending field, and its innovative negative interest rates will continue to be a core differentiating advantage in attracting funds.