Morpho has officially launched its fixed-rate lending protocol Midnight on Base, adding a new credit layer to its onchain lending network as it seeks to bring fixed-term fixed-rate borrowing closer to traditional financial markets.
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- Morpho launched the Midnight on Base program, providing fixed interest rate and fixed-term lending to its onchain credit network.
- The protocol allows lenders and borrowers to negotiate loan terms directly rather than relying on variable-rate pricing models.
- Midnight is designed to support institutional and retail lending, with more than $11 billion already deposited across its lending network, Morphew said.
Cluster I mentioned Midnight is now live after Morpho first introduced the protocol through its whitepaper in May, expanding the project’s lending package beyond Morpho Blue, its variable-rate lending protocol. The rollout begins on Base, with Morpho planning to expand support to additional blockchain networks over time, though the company did not provide a timeline.
Unlike most decentralized lending protocols that rely on floating interest rates, Midnight allows borrowers and lenders to negotiate loan terms directly, including interest rates, maturity dates, and counterparties. Paul Frambaut, co-founder and CEO of Morpho, said the protocol was designed to reflect the structure of traditional credit markets, where borrowing at a fixed interest rate remains the norm.
“Fixed interest rate lending is fundamental to how global credit markets work,” Frambaut said. “Without them, the chain’s markets remain incomplete.”
According to Morpho, Midnight complements Morpho Blue rather than replacing it. While Blue continues to offer variable rate loans through segregated lending markets, Midnight offers fixed-term fixed-rate credit using an intent-based peer-to-peer matching system that decouples pricing, risk management and on-chain execution.
Midnight offers a different lending model
Lenders and borrowers can negotiate their own loan terms rather than rely on pricing formulas built into the protocol, Morphew said. The company said the design aims to support institutional and retail participants while enabling financing backed by real-world token assets, regulated credit products and repo-style transactions.
In response to questions about competing protocols including Pendle Finance, Term Finance and Notional Finance, Frambout told The Block that previous fixed-rate products were largely built on variable-rate lending systems.
“In previous attempts, fixed interest rates were built on variable interest rates, which was not ideal,” Frambaut said. “The right approach is to build fixed prices at the primitive level, and layer variable-priced products on top of them.”
Morpho had already outlined this approach when it published its midnight white paper in May. At the time, the project described Midnight as an intent-based peer-to-peer lending primitive that offers customizable loan terms while remaining non-custodial and open source. Unlike Morpho Blue’s pool-based structure, Midnight matches lending intentions directly between participants and externalizes both pricing and risk management.
The protocol documents also described term loan positions as convertible assets, allowing secondary markets to build around existing credit positions rather than keeping the loans locked until maturity. Morphew argued that this structure could make chain credit markets behave more like traditional bond and term loan markets.
The existing network provides early liquidity
Morphew believes that Midnight’s architecture addresses one of the major problems faced by previous fixed-rate lending protocols.
In a previous blog post, the project said previous designs required lenders to commit capital before borrowers arrived, leaving liquidity fragmented across different maturities. According to Morpho, Midnight instead uses an offer-based system where lenders continue to earn variable returns through Morpho Blue until their fixed-rate offers are accepted.
Once the offer is matched, only liquidity is obtained for that transaction, while positions sharing the same maturity remain fungible. This allows users to enter or exit positions before maturity without splitting liquidity across separate markets, Morphew said.
Frambutt also identified the protocol’s bid book structure as another distinguishing feature. As Midnight launches within Morpho’s existing lending ecosystem, he said the protocol can instantly connect to more than 30 independent custodians who already manage billions of dollars through Morpho Blue. He added that multi-market offerings, programmable compliance tools and callback functionality allow capital to remain productive in variable-rate markets until a fixed-rate match occurs.
Institutional lending remains the main focus
Midnight arrives as Morpho continues to expand its institutional lending business.
In June, Morpho Association raised $175 million in one of DeFi’s largest funding rounds, with Paradigm, a16z Crypto, and Ribbit Capital leading the investment alongside Apollo Funds, Circle Ventures, VanEck, Ledger Cathay, and several other investors. Fortune reported at the time that the deal was worth Morpho Nearly $2 billionAlthough the company did not reveal the rating in its official announcement.
Morphew said the financing will support technical development, commercial integration and broader adoption of open credit infrastructure. Frambaut said at the time that the project was building an open credit network capable of connecting capital providers to borrowers without relying on fragmented lending systems.
The company also said its lending network now holds more than $11 billion in deposits. According to Morphew, companies including Coinbase, Kraken, Bitwise Asset Management, and Société Générale’s regulated digital asset company, SG Forge, are already using its infrastructure to build on-chain credit products. Previous company announcements also listed Binance, Anchorage Digital, and Galaxy Digital among the organizations integrating Morpho’s lending programs.
Coinbase’s onchain lending product is already running on Morpho Blue. Asked if the exchange intends to integrate Midnight into that service, a Coinbase spokesperson told The Block that the company has nothing to announce at this point.
Although Coinbase did not comment further, Frambaut said that several platforms, institutions, and partners have expressed interest in using Midnight.
