Stablecoin Conference · · 22 min
What Institutions Want From Onchain Credit: Compliance, Fixed Rates, and Neutral Infrastructure
With Dennis Bree
Key takeaways
Dennis Bree says Morpho is around $10 billion in deposits, primarily dollar-denominated, and Juno has just launched the first peso vault on it.
Institutions no longer start with yield, according to Dennis Bree: custody, compliance and regulatory risk have to be addressed first.
Morpho Midnight, a fixed-rate, fixed-term lending product, had its white paper published two weeks earlier and is targeted to launch at the end of Q3.
Watch the episode
Summary
Morpho's institutional growth head says compliance and custody now come before yield, and a fixed-rate product is meant to give banks the predictability they expect.
Morpho is around $10 billion in deposits, primarily dollar-denominated, according to Dennis Bree, who is six months into his role as Head of Institutional Growth. The figure came alongside an announcement that Juno launched the first peso vault on the protocol.
Building blocks, not a bank
Dennis Bree describes Morpho with the analogy of HTTP on the internet or Swift for banking. "Why would you build your own? You can just use Morpho," he says. He is clear that the protocol is not there to replace banks but to work with them, offering an alternative or additional infrastructure.
His case for onchain credit rests on speed and cost. Dennis Bree says traditional finance still runs on a five-day credit system, while people should be able to lend or borrow seven days a week, and more cheaply.
“Morpho, from our perspective, is not here to replace banks. That is absolutely what we're not here to do. We want to work with banks to be able to present an alternative and possibly an addition infrastructure to what they already have.”
Risk before yield
In his conversations with institutions and fintechs, Dennis Bree says yield is not the first topic. Without confident answers on custody, compliance and regulatory risk, he says, the discussion never reaches yield. He expects US regulatory clarity to pass over the next couple of months.
Fixed rates with Midnight
Dennis Bree says markets on Morpho Blue use variable interest rates based on utilization and have no fixed redemption period, both foreign to institutions and banks. Morpho Midnight is meant to address that with fixed-rate, fixed-term lending that offers predictability. Morpho published its white paper two weeks before the conversation, is inviting partners into a beta over the next couple of months, and hopes to launch at the end of Q3.
Who is already building
The Coinbase product built on Morpho has over $2 billion in deposits and is growing fast, Dennis Bree says. Payroll company Deel integrated Morpho vaults so its contractors and employees can earn yield. He names curators Steakhouse, Gauntlet and Galaxy as bringing both a DeFi and an institutional flavor.
Dennis Bree expects fintechs to move first, with traditional institutions on an adoption cycle of roughly 12 to 18 months. Until then, Morpho's pitch to them rests on answering risk questions first and on fixed terms through Morpho Midnight.
Morpho, Coinbase, Juno, and Bitso come up most.
- People
- Dennis Bree
- Ben Reed
- Guillermo Goncalvez
- Companies
- Morpho
- Coinbase
- Juno
- Bitso
- Agora
- Figure
- Galaxy
- Gauntlet
- Steakhouse
- Eldorado
- Deel
- Dfns
