Midnight struggles to grow: Fixed-rate lending needs more than just a working product

Morpho’s Midnight protocol has seen slow growth since launch, with about $30M in deposits, $2.8M in outstanding loans, and $6.3M in cumulative originations. The protocol fixes both interest rates and maturity, but the real bottleneck is the lack of stable, long-term borrowing demand in crypto. Most on-chain borrowing comes from leveraged trading, arbitrage, and market-making, which dry up when market conditions worsen. Midnight aims to create a term-credit market with tradable credit units, but this requires anchor borrowers who repeatedly issue debt of the same maturity—something crypto currently lacks.