Morpho will expand the fixed-rate Midnight market to Ethereum

The decentralized lending protocol Morpho deployed its fixed-term, fixed-rate lending agreement Midnight to Ethereum on September 8, expanding the product from the Base network to Ethereum, allowing Ethereum users to now access USDC loans collateralized by WBTC or cbBTC. Morpho co-founder Merlin Egalite stated that the Ethereum launch will start with the "USDC | cbBTC and USDC | WBTC markets" and will gradually expand.

The core difference between Midnight and Morpho Blue lies in interest rate certainty. Blue uses open loans where interest rates fluctuate according to a formula; Midnight, on the other hand, trades credit units at market-priced rates with fixed terms, allowing borrowers to determine financing costs in advance, and lenders to lock in returns instead of bearing interest rate changes with each block. Midnight lenders purchase credit units at prices below the one-to-one redemption value at maturity.

However, the largest potential funding source for Midnight remains constrained. The Morpho Vaults, holding approximately $5 billion in deposits, can only be allocated to the Morpho Blue market until the DAO enables Midnight configuration. Morpho co-founder and CEO Paul Frambot stated that enabling Vault configuration requires just one DAO transaction, but Vault activation is expected to be realized in the fourth quarter. At launch, the total deposits in the Ethereum Midnight market were approximately $7.41 million, with outstanding loans of about $2.63 million.