Morpho Architecture

Definition ∞ Morpho architecture refers to the specific design and operational framework of the Morpho lending protocol, which aims to enhance capital efficiency in decentralized finance. This architecture typically optimizes interest rates by matching lenders and borrowers directly, rather than solely relying on pooled liquidity. It functions as an overlay on existing lending protocols, routing liquidity more effectively. The design seeks to improve returns for lenders and reduce costs for borrowers.
Context ∞ The discourse surrounding Morpho architecture centers on its potential to improve the efficiency and competitiveness of decentralized lending markets. A key discussion involves its interoperability with established protocols and its ability to attract substantial liquidity. Future developments will likely focus on expanding its integration across various blockchain ecosystems and further refining its matching algorithms for optimal performance.