Morpho launched its Midnight fixed-term, fixed-rate lending protocol on Ethereum on Sept. 8, expanding the product beyond Base and giving Ethereum users access to USDC loans backed by WBTC or cbBTC.
The deployment adds predictable borrowing terms for Ethereum users, but its largest potential source of capital remains blocked. Morpho Vaults, which hold about $5 billion in deposits, can still allocate only to Morpho Blue markets until the DAO enables Midnight allocations.
Morpho’s Ethereum-filtered Markets page displayed $7.41 million in total deposits and $2.63 million in outstanding loans around publication. The retained page output did not expose the individual market rows, so those displayed totals could not be broken down between the WBTC and cbBTC markets.
The practical difference from Morpho Blue is rate certainty. Blue uses open-ended loans whose rates change according to a formula, while Midnight trades credit units at market-set prices for fixed maturities. A borrower can therefore establish the financing cost in advance, and a lender can lock a return rather than remain exposed to a rate that changes every block.
Midnight lenders buy credit units below their one-to-one redemption value at maturity. Morpho’s documentation says two lenders in the same market can receive different rates because each rate is determined by the price at which the lender trades.
Morpho co-founder Merlin Egalite said the Ethereum rollout would begin with “USDC | cbBTC and USDC | WBTC markets” and expand progressively. Both collateral types are tokenized representations of bitcoin on Ethereum.
Vault Capital Remains Blocked
The launch does not yet open Midnight to Morpho Vaults, the protocol’s curated deposit products. Morpho co-founder and CEO Paul Frambot said enabling vault allocations would take one DAO transaction, but would also open the newer protocol to significant capital.
Frambot said Morpho wants curators and users to become familiar with Midnight and give the ecosystem time to develop supporting tools before enabling that route. Morpho expects vault activation in the fourth quarter.
Until the DAO acts, Midnight’s Ethereum markets must attract capital through direct offers rather than Morpho’s existing vault deposit base.