Author: Morpho
Compiled by: TechFlow
This post lays out Morpho’s mission as a guideline for its decentralized autonomous organization (DAO). It ensures that contributions to Morpho remain focused on its long-term goals and not swayed by short-term trends.
Why should financial infrastructure be considered a public good?
Financial infrastructures are the core pillars of any economy. They are the underlying systems for multiple market participants to settle financial transactions. However, each layer of financial infrastructure suffers from inadequate openness, efficiency, and resilience.
Openness
Transparency: Consumers and developers lack a clear understanding of financial mechanisms, risks, and costs.
Accessibility: Many people may not have access to traditional financial services due to reasons such as lack of official documentation or remote location.
Competitiveness: High barriers to building financial infrastructure limit market competition, ultimately leading to higher costs for consumers.
efficiency
Fragmentation: Lack of standardized interoperability leads to fragmented market opportunities and reduced quality of service for developers and users.
Speed: Transaction processing can be slow due to manual processes, compliance requirements, or outdated proprietary systems.
elasticity
Centralization: The traditional financial system is highly dependent on centralized institutions, which leads to systemic risks and concentration of power. In a major crisis, this risk could spread to the wider financial system.
Asset Custody: Traditional financial services directly control customer assets, which exposes customers to the risk of hacking, fraud, and mismanagement, which may result in asset loss and restricted access.
Most financial infrastructure is controlled by private companies, which usually lack the motivation to solve the above problems. Therefore, financial infrastructure should not be owned by individuals or countries, but should be owned by the world as a public product for all mankind, just like the Internet.
A public good is a resource that is available to everyone without any reduction in its availability. While traditionally provided by governments through taxation (such as roads and parks), the concept also applies to open source software like Linux, which can be used and distributed freely.
For financial infrastructure, this means that everyone can get stable and reliable financial services. All codes, rules and conditions are transparent, and the only thing users need to trust is the verifiable technology itself.
As more and more people around the world participate in these financial public goods, network effects will improve their efficiency and create unprecedented value, which will directly benefit end users rather than middlemen.
How Morpho achieves this mission: Building a financial system like the Internet
The best way to transform private financial infrastructure into a public good is to re-build it in the same way as the early internet, using blockchain technology. The design decisions of the early internet — decentralization, permissionlessness, and foundational protocols — sparked an explosion of development, efficiency, creativity, and value creation.
Before Ethereum, it was difficult to apply these principles to financial operations because storing and modifying financial data online required relying on a trusted third party to host the server. Today, blockchain technology allows server-side software to take precedence over the server and its owner, which finally allows financial infrastructure to be shared by the public.
If financial operations could be consolidated and settled on a global protocol that is as decentralized, permissionless, and foundational as possible, the financial sector could see a true renaissance.
Decentralization
Infrastructure should not be controlled by any centralized authority.
Resilience: The global financial network should be provably secure. Its accessibility and functionality should not depend on a single server, community, individual, or any single point of failure.
Predictability: The decentralized web provides a trustless foundation that developers can integrate with confidence that it will always work the same way. Even if the application or user interface changes, the foundation remains the same, providing reliability.
No permission
Financial infrastructure should be open to anyone to build on.
Flexibility: The base layer provides a high degree of freedom, allowing developers to provide services for any type of user, adapting to their unique needs, contexts, situations, or regulatory constraints.
Competition: Permissionless financial networks allow a large number of developers to compete to provide the most efficient solutions to different financial needs. Over time, open access reduces fees and improves quality as developers compete to provide better, cheaper, and more innovative solutions.
original
The core infrastructure of financial networks should be kept as simple as possible, leaving complexity to the periphery.
Innovation: A simple technical foundation provides developers with greater flexibility and fewer restrictions, which inspires creativity. Specific clients can focus on features such as compliance, risk management, and user experience without having to worry about the complexity of the core protocol. This division of responsibilities improves performance and resilience, allowing the core protocol to focus on performing basic financial operations safely and efficiently.
Aggregation: The original protocol is able to support multiple products using the same core technology, allowing the same instance to be reused in different application scenarios. The more original the protocol, the more flexible it is in connecting various financial applications. As the number of financial applications built on the network increases, the network effect is enhanced at the original level, creating more value for all participants.
What Morpho does to achieve this mission
The vision of rebuilding financial infrastructure as a public good is very ambitious and may take decades to achieve. However, it must start small, bootstrapped, and then gradually expand from crypto products to core financial infrastructure.
Morpho initially focused on a specific challenge: optimizing existing crypto lending services. But it soon became clear that achieving systemic improvements would require completely rebuilding the lending market from the ground up, not just as a specific product or service, but as a financial infrastructure that anyone could leverage to build their own products and services.
Morpho's unique aggregation architecture is designed to provide:
An open, immutable, and flexible lending infrastructure that can be leveraged by any type of developer (entrepreneurs, fintechs, centralized exchanges, institutions) to enable countless different use cases.
Sharing liquidity increases Morpho’s efficiency and network effects, ensuring that every participant benefits as the ecosystem expands.
Provide better diversified and tailored lending experience to global users.
What happens next
Improve decentralization. Ensure Morpho has an active, engaged, and growing community. Advancing Morpho’s decentralization is a key and ongoing goal as it is one of the most important characteristics of a blockchain public product.
Improve the existing Morpho Stack. Attract more contributors to simplify the product suite and ensure developers have all the tools they need to build a successful business on the Morpho platform.
Expand the Morpho ecosystem. Morpho is still in its early stages and many potential developers and users have yet to realize its potential. There are also a large number of cryptocurrency lenders who have yet to connect on the Morpho platform.
Looking to the future. While Morpho has pioneered many innovations in the decentralized finance (DeFi) space, continued improvement is critical to maintaining its industry leadership. Morpho contributors are dedicated to researching and developing future innovations that push the limits of what’s possible in finance.
