Solving the Cold Start Problem in Fixed-Rate Lending: How Morpho Optimizes Capital Efficiency

Morpho Midnight, a zero-coupon bond lending protocol launched in July, addresses the cold start and liquidity fragmentation issues in fixed-rate lending. By allowing users to express lending and borrowing intentions without locking capital until matching, and by making positions tradable, the protocol improves capital efficiency and provides predictable borrowing costs. The protocol has reached $3 million in active loans and aims to leverage Morpho's existing network effects to scale.