Andreessen Horowitz led the round, Variant participated via native token sales. The DeFi lending protocol Morpho raised $18 million. The round also included other investors such as Semantic Ventures and Cherry Crypto, Spark Capital, Spark Capital, Standard Crypto, Coinbase Ventures, and Semantic Ventures.
Morpho, a DeFi lending protocol, has raised $18 million in a round led by Andreessen Hoowitz (a16z), and Variant via native token sales in exchange for USDC.
An announcement stated that other investors included Cherry Crypto, Semantic Ventures and Spark Capital. Standard Crypto was also included in the round.
Paul Frambot, founder of Paris Polytechnique School, was finishing his last year. The deal closed on February 12, just before he turned 21.
Morpho is a DeFi lending protocol that uses existing protocols. It moves loans from liquidity pools to a peer-to–peer mechanism, offering higher yields for investors.
However, the shock from recent market events, including the May collapse and the Terra blockchain, continues to affect the DeFi market. According to Block research the supply rate of USDT on Compound has fallen to 2.07% from 10.5% in December 2013.
Frambot believes that Morpho can weather any market conditions.
Frambot said in an interview that Morpho “strangely fits the bear markets conditions because it is about native APY [annual percent yield] improvements.” The bear market is actually better for us because although we may only make a 1% increase in your APY, it really matters now that yields have dropped.”
DeFi lending demand
He acknowledged that DeFi lending is in decline, but he stated that there is still a demand for products like Morpho.
According to The Block research, Compound’s total valued locked is currently at $2.7 Billion, a measure of the adoption scale by calculating tokens locked value. It was $9.1 Billion at the end last year.
Morpho, however, is an improvement layer for existing protocols and not tied to any one lending protocol. It is currently exploring ways to integrate Aave and add a corresponding Blockchain network.
It also took steps to decentralize its protocol, which is why it chose to have two co-leads instead of one. This was done by distributing non-transferable governance tokens to its users. These tokens will be linked to checkpoints called epochs or ages. Users can vote for the protocol’s improvement and claim rewards.
This funding news comes in the wake of recent venture capital investments in the DeFi lending sector despite increasing competition. Quona Capital and Sequoia Capital India co-led last month a $6 million seed round to support MoHash’s lending protocol.