Why has Morpho become the most popular Defi currently? On June 9th, Morpho announced the completion of a $175 million financing round, with a post investment valuation of $2 billion. More than ten institutions, including Paradigm, a16z crypto, Ribbit, Apollo Global, have invested in it. This number exceeds Uniswap's 165 million in 2022. Unexpectedly on the investment list is Apollo Global Management, one of the world's largest alternative asset management companies with assets under management exceeding $900 billion. Apollo not only participated in this round, but also signed a cooperation agreement with Morpho as early as February this year, promising to purchase up to 90 million MORPHO tokens through open market or over-the-counter transactions within 48 months, accounting for 9% of the total supply. SACRED, a tokenized private equity credit fund under Apollo, went live in April and was included in the Morpho collateral whitelist. SG-FORGE, a subsidiary of Societe Generale, deployed Euro and US dollar stablecoins that comply with MiCA regulations to Morpho in September last year, marking the first time a European systemically important bank has integrated compliant stablecoins into DeFi lending protocols. Coinbase launched its BTC mortgage loan product on the Base chain in January last year, which is fully supported by Morpho at the bottom. The cumulative lending has exceeded $1 billion, and Brian Armstrong said the next goal is $100 billion. These institutions are embedding pipelines for their future on chain credit business. Paradigm partner Frankie's statement is very direct: "In the future, every bank, asset management company, and pension fund will want to access the on chain credit market, and Morpho's open infrastructure is laying the foundation for global financial on chain. " Single entity protocols like Aave have a fatal bug: all assets are placed in a tightly coupled pool, managed by a unified risk framework, so any problem in any corner can spread to the entire system. In April of this year, Kelp DAO's rsETH experienced a technical crisis due to Aave's pooling architecture, which quickly transmitted risks and caused panic and fund outflows. TVL fell from 26.4 billion US dollars to 14.2 billion US dollars in a single month, with a loss of over 12 billion US dollars. And Morpho is taking a modular route. It separates the core lending infrastructure from pool planning and risk underwriting, allowing anyone to create an isolated lending market with custom parameters. The collateral type, clearing threshold, and interest rate model are all configurable, and risk management is outsourced to an independent Curator. Similarly to the rsETH incident, Morpho's isolated market design strictly limited risk within a single market, without any chain reaction. However, this architecture sacrifices the value capture of unit capital. Because Morpho does not personally underwrite every risk, its ability to extract capital per unit is weaker than Aave's. But this is precisely why it can meet the needs of institutions. Apollo、Coinbase、 Players like Faxing Bank do not want to be stuffed into a pre adjusted risk cocktail. What they want is control: to decide how assets are underwritten, which risks to accept, and how products are designed for their own users. Prior to the financing announcement, Merlin Egalite released a white paper on its fixed rate lending agreement, Morpho Midnight. Borrowers and lenders can agree on a fixed interest rate and maturity date in advance, and the product form is similar to traditional fixed interest rate bonds or term loans. The most easily understood categories of RWA in the past two years are token treasury bond and stable currency, because they are simple, standardized and highly liquid. However, the next stage of RWA is not to continue to issue treasury bond tokens, but to move the operating system of the credit market onto the chain. Credit assets are fundamentally different from treasury bond tokens. The core issues of treasury bond tokens are custody, redemption and income transmission. The core issues of credit assets are much more complex: who underwrites, who assumes default, how to dispose of mortgage, how to service cash flow, and where investors stand in the legal structure. The next step for on chain finance is not to issue more asset tokens, but to make credit issuance, collateral control, risk assessment, fund allocation, and investor distribution all run on a programmable track. What Morpho is doing is essentially a middleware for the credit market. It does not issue loans, bear credit risks, or manage assets. What it provides is an infrastructure layer that enables all these participants to operate on it. Apollo provides credit funds on it, Coinbase provides BTC collateral loans on it, Faxing deploys stablecoins on it, and Curator underwrites risks on it. Every credit transaction goes through Morpho, which extracts agreement fees from it. DefiLlama data shows that TVL is 6.445 billion yuan, with a monthly agreement fee of 24.15 million US dollars. If institutions adopt it at a slower pace than expected, revenue growth may not keep up with the valuation. In addition, the execution of on chain credit infrastructure is extremely heavy, involving legal structure, cross jurisdictional compliance, and default resolution mechanisms.