Morpho Vaults

Published 2026-08-02 · data as of 2026-08-01

Morpho is a decentralized lending protocol, offering overcollateralized lending and borrowing of crypto assets. The protocol provides variable and fixed rate markets, and a vault framework for lending strategies across those markets.

Vaults, which are currently in their second version, are managed by curators, who allocate deposited funds across lending markets. This memo takes a look at the status and evolution of Morpho Vaults as of July 2026, based on data from Morpho's public API.

Stablecoins on Ethereum and Base

Morpho Vaults hold ~$4.5B across 264 listed vaults. Roughly half the TVL sits on Ethereum and ~40% on Base, with a long tail of newer chains making up the rest. And it is predominantly a stablecoin product, accounting for ~93% of deposits (mostly USD, at a ~4.5% blended net APY).

Growing & migrating

Morpho vaults have grown over the last year, from ~$2.6B in TVL a year ago to ~$4.5B today. But the top line numbers hide an underlying change, as MetaMorpho V1 peaked above $4B in October before falling to ~$1.3B, while Vault V2 has gone from ~$200M in January to ~$3.3B today. This growth in V2 has been driven partly by migration of vaults from V1 (roughly half of V2 deposits).

The migration is impressive, given the sticky nature of deposits, and it is still ongoing, with a Steakhouse Prime USDC whale rotating ~$180-200M from V1 to V2 in the last few days of July.

The rest is "new business". $1.25B of the V2 book (38%) sits in assets V1 never meaningfully supported such as PYUSD, RLUSD, USDG and EURCV, largely in issuer-branded vaults. V2 has also introduced new curators, with Sentora, Sky, Galaxy, Wintermute, and Hyperithm now accounting for 42% of V2. Meanwhile 12% sits on chains with no V1 (Robinhood Chain, Monad), and there are specific "new" allocations in V2 (Spark's ~$200M, Ethena's $80M treasury).

This combination of migrated funds and net-new business paints a positive picture for Vault V2.

Curation is winner-take-most

Morpho Vaults are heavily dependent on curators, and the market is currently quite concentrated, with Steakhouse accounting for nearly half of vault TVL, and the top 3 (with Gauntlet and Sentora) make up more than 80%. That being said, as mentioned V2 has seen the arrival of some new curators, which is promising for the robustness of the ecosystem.

Curators can charge fees, and are currently on a ~$9.6M annual run-rate, but zero-fee vaults hold nearly half of vault TVL, suggesting that side-business models and other incentives may currently be shaping the curation market.

Who actually deposits

Depositors are more diverse, ranging from ~82K Coinbase Smart Wallets depositing an average of $2.1K each at one end, to Spark's $204M ALMProxy and a single wallet with $308M at the other.

Breaking down the top 20 vaults, there is actually quite a distribution of participants: embedded retail at ~27%, single-mandate whales at ~26%, managed institutional (Sentora) at ~24%, protocols at ~8.5% and then a miscellaneous self-directed ~15%.

Where the yield comes from

Vault yield is borrowers' interest, and the demand side is more concentrated. Half of all borrowing is against BTC, dominated by Coinbase's in-app bitcoin-backed loans (cbBTC collateral is 39% of the entire borrow book). The cbBTC market on Base is 31% by itself, spread across ~34K borrowers, predominantly Coinbase smart wallets. The rest is mostly levered staking and stablecoin carry trades, with a small RWA tail.

The mix differs by chain, with Base heavily reliant on cbBTC (75% of its borrowing), while Ethereum has a more diversified book with no collateral above ~22% — BTC via three exchange wrappers (Coinbase's cbBTC, Kraken's kBTC, WBTC), staked-ETH leverage, and a growing RWA tail.

Yields have been falling, with the flagship USDC vault's APY compressing from ~11% to ~4.4% over the past year, suggesting that the market is borrower-constrained. This is consistent with the broader bear market cycle, and should change if the market recovers, though sustained growth will require new sources of borrower demand.

Listed markets, $B borrowed at % utilization. Data: .

The unlisted economy

The analysis so far focuses on listed vaults only (i.e. those which show up on Morpho's own apps). Morpho Vaults are permissionless, and there are some interesting things which show up in the unlisted twilight realm:

• Junk: the four "largest" unlisted markets claim ~$13.2B but are self-lending loops, priced by oracles the creator controls. This is to be ignored.
• White-label: 1,265 unlisted vaults holding ~$390M of deposits: World App (Re7), Grove (Sky), Safe. World App alone has ~787K holders averaging $11–73 each, ~4x the users of every listed integration combined.

The chart below includes the World App vaults alongside the listed set: TVL vs holders, on a log-log scale. World App sits in the top-left with their hundreds of thousands of users ($11/holder); listed whale vaults are in the bottom-right ($10M/holder).

Every vault sits on a diagonal of average position size. Data: 2026-08-01.

Looking forward

Morpho Vaults are in a strong position: the majority of the migration from V1 is done, and there are proven growth levers available.

• New chains: intentionality is important, to invest only in venues with sufficient demand, but Robinhood and Monad are recent demonstrations of this growth opportunity. With newer chains increasingly focused on stablecoins, Morpho is well placed to be the preferred source of yield.
• Beyond reference customers: Morpho has built a strong user-facing yield product for Coinbase, and it is now seeing explosive growth with Robinhood. Similarly it should continue to take playbooks that have worked (whether partnering with institutions such as PayPal and Société Générale, or protocols such as Spark) and make them available to new and existing participants looking to expand their onchain offering.
• New assets: V2 growth has been partly due to the introduction of new assets, and we can expect more stablecoin issuers to come online. Morpho should continue to target blue chip opportunities.

Meanwhile there is a clear avenue to "explore" (rather than exploit), in the form of Midnight, Morpho's fixed-rate, fixed-term market that launched publicly in July. The market is tiny today, with a handful of order books, and it is not yet supported by Morpho Vaults. A Midnight adapter is an obvious growth opportunity for Morpho and its curators.

So plenty of possibilities, which often suggests that focus will be the challenge. Exploring Midnight will be a key priority as that market matures, and on the "exploit" side, the highest leverage will likely come from "combo move" opportunities which can span multiple growth dimensions (Robinhood is the case study once again, with a new chain, an embedded userbase and an aligned asset in USDG, the Robinhood-backed Global Dollar, which on Morpho lives only on Robinhood Chain).

All of the above will require close partnership and collaboration with curators, who play a crucial role in bringing new vaults and strategies to market. The existing curators clearly have an edge, but Morpho may want to cultivate a more balanced curator set to reduce the risk associated with depending on a small number of external teams.

Finally, it is worth emphasizing that Morpho's broader team will need to ensure that there is corresponding growth on the borrow side. Vault APYs compressed over the past year as supply grew faster than demand. ~31% of all borrowing is a single Coinbase product (cbBTC on Base; 39% counting cbBTC on all chains), and the EURCV vault has sat majority-idle when deposits outran demand. In this context, Kraken's $224M of kBTC is worth noting as a proof of expansion, replicating the bitcoin-loan playbook for a second exchange. More of that, as well as targeting RWA collateral are obvious demand-side opportunities.

It's often said that bear markets are a good time to lay foundations, and it does appear that Morpho has been taking that approach. But even without the tailwind of broader market growth, Morpho's Vaults are looking pretty healthy.

Method