In defence of Morpho: There’s still a widespread misconception in crypto that nobody should ever lose money lending, and that if they do, the protocol or curator must have failed and somebody else should make them whole. But the interest lenders earn is compensation for taking risk. Risk means losses will sometimes happen. Over a long enough period, lending against almost any collateral will eventually produce losses, regardless of oracle design, LTVs or other parameters. If there were literally no risk of loss, there would be little reason for borrowers to pay meaningful interest. Higher yields generally exist because somebody is taking more risk. There’s also no universally “safest” lending design, because protections for lenders and borrowers are often in tension. Every design makes trade-offs. A fixed oracle can protect borrowers from short-term volatility and manipulation, but transfers more risk to lenders. Lenders should demand more interest for bearing that risk. A market oracle gives lenders more responsive pricing and can protect them better as collateral deteriorates, but exposes borrowers to volatility, liquidity shocks and manipulation. Borrowers should therefore be more conservative. No protocol design can protect lenders if the collateral itself goes sour or if there’s a hack somewhere else in the system. Morpho has more blow-ups than Aave largely because it permits a much broader spectrum of markets and risk. Anyone can create a market, so naturally some markets will be much riskier than anything Aave would list. That isn’t evidence that the model is broken.

I sincerely doubt the number is that high. Insane if so. But the point about using a low float high FDV token to strike deals for exclusive integrations still stands. People used to say to me all the time at Euler: “do more BD.” But lack of integrations almost always was nothing to do with BD efforts. Very few people we didn’t speak to during my time there. It almost always came down to money. “So and so are offering X millions for an exclusive integration, what can you do?” I assume most of those types of deals were done with tokens and not real $ because the numbers were often eye watering. And we had 1/100th of budget or less than competitors because of the depressed EUL token price. So we would always get excluded or pushed aside once someone else came in. Sometimes people talked to us enthusiastically one day and completely ghost us the next once they’d agreed a deal elsewhere. With the benefit of hindsight I think we should have tried to take Euler private and start again with the token. But hindsight is a wonderful thing. It wasn’t the same regulatory environment as we have now and there were lots of arguments against doing that. The point is that you really need a highly valued token to compete for liquidity and integrations in lending though. The tech is very much secondary to your ability to pay in the early years to bootstrap liquidity and integrations. It does make me wonder what will happen when all these pay to play token holders start to take profit after vesting ends or hedge out their exposure though.