Can MORPHO outgrow Aave after its TVL jumps to $11.78B?

MORPHO reached a Total Value Locked (TVL) of $11.78 billion, becoming the number two lender. This development came as most DeFi protocols struggled after a broader sector disruption from the KelpDAO’s hack.

The hack left Aave Protocol, which leads the lending sector by DeFi TVL, with bad debt of $200 million, while MORPHO’s exposure was only $1 million across two isolated markets.

Consequently, users started migrating to other protocols like SparkLend, which they deemed safer. Such observations suggested that MORPHO could outgrow Aave, though the certainty of when was undetermined.

    AD

MORPHO and AAVE lead the lending sector

Morpho [MORPHO] came second, with slightly less than half of AAVE’s TVL, which was at $27 billion.

Its ETH-denominated TVL tripled for year-over-year (YoY) to around 2.9 million ETH. This meant that MORPHO’s dominance in this sector was 16.82%.

Furthermore, its Active Loans grew to $4 billion, which was about a third of that of AAVE at $11.75 billion. The Annualized Fees of the second-largest lending protocol were $175 million, a fraction of AAVE’s $938 million.

Source: DeFiLlama

While MORPHO’s dominance was far below that of Aave [AAVE], the growth indicated a shifting preference due to security concerns.

Institutional involvement

MORPHO was also starting to get institutional involvement. For instance, loans originating from Coinbase totaled $2.17 billion in USDC, half of all its active loans.

Additionally, Apollo Global, a firm with $940 billion AUM, announced its backing. The partnership was to expand lending infrastructure.

In line with that, Apollo Global committed to acquire 90 million MORPHO over the next 48 months directly or through its affiliates. The move suggested a significant accumulation, which would pour more capital into the altcoin.

Understanding MORPHO’s uptrend since April

On the charts, the altcoin has been trending higher since April started. Since then, most DeFi tokens have been declining as the hacks occurred in early April. Hence, the altcoin is up 100% year-to-date (YTD).

MORPHO was moving upwards above an ascending trendline support. The MACD bars showed that selling pressure had almost diminished as the altcoin traded at support.

The altcoin was also aligning with AAVE, as indicated by a Correlation Coefficient (CC) of 0.81.

Source: MORPHO/USDT on TradingView

Holding above the support could push the altcoin back to $2.40 or higher. Conversely, a break below it would delay the uptrend as it could indicate a shift in market structure.

Altogether, the altcoin was far away from taking over AAVE in this sector, but that could change abruptly if the latter continues to face security concerns.

Final Summary

• _MORPHO’s TVL rises to $11.78 billion, becoming the second-largest lending protocol. _
• MORPHO price has been trending to the upside since the start of April, and the charts reflected chain strength.