Morpho's unique aggregation architecture aims to provide a better, more diverse, and customized lending experience for global users.
Author: Morpho
Translation: DeepTechFlow
This article elaborates on Morpho's mission as a guiding principle for its decentralized autonomous organization (DAO). It ensures that contributions to Morpho remain focused on its long-term goals rather than being swayed by short-term trends.
Why should financial infrastructure be considered a public good?
Financial infrastructure is the core pillar of any economy. They are the foundational systems for financial transaction settlements among multiple market participants. However, each layer of financial infrastructure faces issues of openness, efficiency, and resilience.
Openness
Transparency: Consumers and developers lack a clear understanding of financial mechanisms, risks, and costs.
Accessibility: Due to reasons such as lack of official documentation or remote geographical locations, many people may be unable to access traditional financial services.
Competitiveness: The high barriers to building financial infrastructure limit market competition, ultimately leading to higher costs for consumers.
Efficiency
Decentralization: Lack of standardized interoperability leads to fragmented market opportunities and reduces the quality of service for developers and users.
Speed: Transaction processing may be slow due to manual operations, compliance requirements, or outdated proprietary systems.
Resilience
Centralization: Traditional financial systems heavily rely on centralized institutions, leading to systemic risks and concentration of power. In major crises, these risks may spread to a wider financial system.
Asset custody: Traditional financial services directly control customer assets, exposing customers to risks of hacking, fraud, and mismanagement, potentially resulting in asset loss and restricted access.
Most financial infrastructure is controlled by private companies, which often lack the incentive to address the aforementioned issues. Therefore, financial infrastructure should not be owned by private or national entities, but should be collectively owned globally, becoming a public good for all humanity, just like the internet.
A public good is a resource that is available to everyone and does not diminish in availability. While traditionally provided by governments through taxation (such as roads and parks), this concept also applies to open-source software like Linux, which can be freely used and distributed.
For financial infrastructure, this means that everyone can access stable and reliable financial services. All code, rules, and conditions are transparent, and users only need to trust the verifiable technology itself.
As more and more people globally participate in these financial public goods, network effects will enhance their efficiency, creating unprecedented value that directly benefits end users rather than intermediaries.
How does Morpho achieve this mission: Building a financial system like the internet
The best way to transform private financial infrastructure into a public good is by reimagining it through blockchain technology, following the early internet model. The design decisions of the early internet—decentralization, permissionless, and foundational protocols—sparked explosive growth in development, efficiency, creativity, and value creation.
Before the emergence of Ethereum, applying these principles to financial operations was challenging because online storage and modification of financial data relied on a trusted third party to host servers. Today, blockchain technology prioritizes server-side software over servers and their owners, finally allowing financial infrastructure to be publicly owned.
If financial operations can be integrated and settled on global protocols that are as decentralized, permissionless, and foundational as possible, the financial sector may experience a true renaissance.
Decentralization
Infrastructure should not be controlled by any centralized authority.
Resilience: The global financial network should be proven to be secure. Its accessibility and functionality should not depend on a single server, community, individual, or any single point that may cause failure.
Predictability: Decentralized networks provide a trustless foundation, allowing developers to confidently integrate and ensure its permanent operation in the same manner. Even if applications or user interfaces change, the foundation remains unchanged, providing reliability.
Permissionless
Financial infrastructure should be open to anyone for building.
Flexibility: The foundational layer provides a high degree of freedom, allowing developers to serve any type of user, adapting to their unique needs, backgrounds, circumstances, or regulatory constraints.
Competition: Permissionless financial networks allow a large number of developers to compete to provide the most effective solutions to meet different financial needs. Over time, open access reduces costs and improves quality as developers strive to offer better, cheaper, and more innovative solutions.
Foundational
The core infrastructure of financial networks should strive to remain simple, leaving complexity to the periphery.
Innovation: Simple technical foundations provide developers with greater flexibility and fewer restrictions, sparking creativity. Specific clients can focus on characteristics such as compliance, risk management, and user experience without worrying about the complexity of the core protocol. This division of responsibility enhances performance and resilience, allowing the core protocol to focus on securely and efficiently executing basic financial operations.
Aggregation: Foundational protocols can support multiple products using the same core technology, allowing the same instance to be reused in different application scenarios. The more foundational the protocol, the more flexible it is in connecting various financial applications. As the number of financial applications built on the network increases, network effects are enhanced at the foundational level, creating more value for all participants.
What has Morpho done to achieve this mission
The idea of rebuilding financial infrastructure as a public good is ambitious and may take decades to achieve. However, it must start small, self-initiate, and gradually expand from cryptographic products to core financial infrastructure.
Initially, Morpho focused on a specific challenge: optimizing existing crypto lending services. However, it quickly became apparent that to achieve systemic improvements, the lending market needed to be completely rebuilt from scratch, not just as a specific product or service, but as a financial infrastructure that anyone could use to build their own products and services.
Morpho's unique aggregation architecture aims to provide:
Open, immutable, and flexible lending infrastructure that any type of developer (such as entrepreneurs, fintech companies, centralized exchanges, institutions) can utilize to realize countless different use cases.
Shared liquidity to enhance Morpho's efficiency and network effects, ensuring that as the ecosystem expands, every participant benefits from it.
A better, more diverse, and customized lending experience for global users.
What will happen next
Increasing decentralization. Ensuring that Morpho has an active, engaged, and growing community. Advancing Morpho's decentralization remains a key and ongoing goal, as it is one of the most important features of blockchain public goods.
Improving the existing Morpho Stack. Attracting more contributors to simplify the product suite and ensuring that developers have all the tools they need to build successful businesses on the Morpho platform.
Expanding the Morpho ecosystem. Morpho is still in its early stages of development, and many potential developers and users have yet to realize its potential. There are still many cryptocurrency borrowers who have not connected on the Morpho platform.
Looking to the future. Despite pioneering many innovations in the decentralized finance (DeFi) field, continuous improvement is crucial to maintaining its industry-leading position. Morpho's contributors are dedicated to researching and developing future innovations, pushing the limits of possibilities in the financial sector.
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