Competiton
The Base Lending Wars: Aave vs Morpho
Aave and Morpho are the top two lending protocols. And they’re battling on Base chain.
Aave is a much older protocol than Morpho. It’s the OG. And therefore, they’re much bigger than Morpho. Compared to ~$36B in TVL on Aave, Morpho only has ~$6B.
But on Base chain, Morpho dominates Aave. Morpho’s modularity is the main reason for this. It allows outside institutions like Coinbase to launch lending markets on Morpho.
Coinbase used Morpho to launch the cbBTC market.
- It allows Coinbase users to borrow against BTC.
- Coinbase could grow its BTC wrapper by converting the deposited BTC to cbBTC.
- While there isn’t any Coinbase Fee on this service, they could potentially capture some fee in the future.
This drove Morpho’s domination on Base. Out of ~$1.6B Morpho TVL on Base, ~$1.28B is cbBTC collateral. And Aave only had ~$687M in TVL on the day the incentives started.
On July 23rd, Aave fired against Morpho.
They announced incentives for Aave Base users. They incentivized borrowing USDC, depositing cbBTC, and more.
More importantly, many of the actions required users to migrate 100% of holdings from Morpho to Aave on Base. This was a clear vampire attack on Morpho. You can see the details here.
Morpho responded by increasing $MORPHO rewards on USDC.
Early results seem to favor Aave. Since incentives started on July 23rd,
Morpho TVL on Base stayed flat at ~$1.6B. Aave grew from ~$687M to $780. A 13% growth.
So people are more attracted to Aave’s offer right now.
Are people leaving Morpho for Aave? Well.. they’ve started to do so. Aave has already attracted >10% supply on cbBTC on Base. Morpho still has >65% of supply. But the trend is favoring Aave.
You can track the cbBTC shares b/w the protocols here. Similarly, you can find other assets on relevant Basescan pages.
But this war is far from over. The Aave incentive program is for 6 months, and we’ve barely crossed 2 weeks.
Here are some dynamics influencing this war.
- Morpho doesn’t earn any revenue right now. Aave does, and is rewarding users in USDC, while Morpho is spending its Gov Token.
- This increases sell pressure for $MORPHO. Additionally, Morpho hasn’t disclosed details of deals with market makers & exchanges. So people prefer USDC rewards over
- Even if Morpho keeps users by increasing the $MORPHO incentives, it’s a win for Aave. Morpho is forced to spend a lot more than Aave.
Despite having a lead on Base, Morpho is far behind Aave in terms of metrics like TVL. There are more foundational differences between them as well.
If you want us to compare Aave and Morpho in depth, let us know by replying to this email.
Sponsored by Mantle.
$MNT: Why’s It Heating Up?
In the last 30 days, $MNT is up 57%.
Among the top 50 tokens by market cap, it’s the 3rd top gainer. That’s huge. What’s happening?
Mantle Network is positioning itself as the “blockchain for banking”. UR is an onchain finance app that combines both crypto and fiat (EUR, CHF, USD, RMB) in one account.
UR activity will be on Mantle Network. All the value will accrue to MNT. It’s the gas token on the network.
Unlike other “governance tokens”, MNT has tangible utilities as well. Its holders had unlocked access to:
- 7 Bybit Megadrop events
- 10 Bybit Launchpad projects
- 31 Bybit Launchpool campaigns
- 11 exclusive Rewards Station opportunities with various airdrops
- 6 ongoing yields/rewards across different protocols
Additionally, Bybit Co-CEO Helen Liu and Head of Spot Emily Baoand have officially joined Mantle’s advisory team. So we can expect more partnerships that add value to MNT.
There are too many initiatives to cram into one post. But that’s a good problem to have.
Protocol
Boros: A New DeFi Financial Primitive
Crypto just got an entirely new game to play.
What happened? After cooking for 1.7 years, Pendle launched Boros on Arbitrum.
Boros allows users to speculate on & hedge funding rates.
But, what are funding rates? Funding rates are “fees” paid or received by traders every time period (every hour on Hyperliquid or every 8 hours on Binance) on a perpetual exchange.
- If the perp price is higher than the real spot price, long traders pay short traders.
- If the perp price is lower, short traders pay long traders.
In other words, if everyone is bullish at a time, long perp traders will have to pay short traders to get leverage and vice-versa.
Boros will allow people to trade these funding rates.
Boros enables it by turning funding into “Yield Units” (YU). Each YU represents the funding rate of 1 unit of some underlying token on some underlying exchange. You can learn about their tech magic here.
Right now, it offers yield markets on BTC and ETH funding rates on Binance.
Now, you might ask, isn’t this too gigabrain for crypto? Will anyone use this?
You’ll be sorta correct. This product isn’t for small fishes who take 100x leverage from their $100 account. They won’t care about funding rates.
But big whales and institutions will care about this.
Perps and funding rates isn’t some niche phenomenon. Perps does multiples of spot volume. There’s over $180B in open interest across major CEXs and DEXs like Binance, Hyperliquid, and Bybit. For contrast, total DeFi TVL is only $145B.
There are two ways Boros will help them.
#1. Hedging
When you’re trading with billions, small % funding rates will cost you millions. You can fully hedge your funding rate exposure using Boros.
Ethena is a great example here. Its stablecoin yield comes from spot LST and equivalent short positions on perp exchanges. But they are faced with the risk of funding rates going negative and losing money.
By using Boros, Ethena can hedge it and receive a fixed funding rate.
#2. Speculation
At the end of the day, crypto is full of speculators.
There will be many whales who have an edge in predicting the funding rates. They can use Boros to speculate on these funding rates and make money. It’ll be just another perpetual market for them to trade.
Pendle had always been great for creating yield trading markets. But it was limited. It could only create yield markets for onchain entities.
Boros removes that limitation. It allows users to create markets for offchain yield products as well. Boros is using funding rates from Binance, an offchain entity.
This opens up a lot of new markets for Pendle.
This is a new financial primitive that wasn’t possible before. These kinds of innovations are the promise of DeFi.
If you want to play in this new market, learn the game here.
🚀 DeFi Catalysts
GammaSwap released its first yield token, gETH. It earns yield by providing liquidity into Uniswap V3 and hedging Impermanent Loss (IL) using the GammaSwap protocol.
Solv Protocol introduced the BTC+ Vault. It’ll tap into many yield sources from onchain credit markets to tokenized real-world assets.
Aave has partnered with Metamask to launch Stablecoin Earn. It’ll allow users to earn yield on stablecoins from MM by depositing to Aave.
Puffer Finance upgraded its UniFi AVS. It brings sub-second execution to rollups through validator-backed gateways and preconfirmations.
Pendle has gone live on HyperEVM. It allows Pendle exposure to a growing market.
Ventuals is enabling trading of the pre-IPO companies with up to 10x leverage. The testnet has went live.
Jupiter has released Jupiter Lend for private beta. They’re partnering with Fluid to implement their advanced lending tech.
INFINIT launched its $IN and its airdrop claiming portal. The token can be staked to earn protocol fees and governance rights.
DeFi App launched the mobile beta of crypto’s everything app. It’s in early access for our first cohort.
Maple Finance has passed a new proposal increasing SYRUP buybacks from 20% to 25% of monthly revenue.
🚀 New Launches
Payy, a privacy-focused payment app, has launched its Payy card. Assets on the Payy are self-custodied as well.
Ambient Finance has launched on the testnet of Fogo, a new L1 that hyper-optimizes for performance by forking Solana.
Polynomial launched Polynomial Fusion. It’s the first hybrid orderbook system combining a high-speed CLOB with an oracle-based AMM.
Etherex has officially launched. It’s a new DEX on Linea built by Consensys and NILE. It claims to be the most user-aligned decentralized exchange yet.
📰 Industry News
Coinbase is planning to raise $2B through the sale of convertible notes.
SEC clarified that liquid staking tokens (LSTs) like stETH and rETH may not be considered securities as long as certain conditions are met.
GTE Exchange was a flag-bearing project in the MegaETH ecosystem. They’ve announced their exit from MegaMafia, their accelerator program.
🐦⬛ X Hits
- Story of a perp trader.
- Spam, Identity, & Blockchains.
- Economics of DEXes vs Launchpads.
- Is the Four-Year Cycle actually dead?
- Solving fragmentation through intent-centric execution.
😂 Meme
Until next time,
Edgy
Now’s the time to tighten your portfolio up.
I’ve been reviewing a few portfolios recently, and the same mistakes keep popping up over and over. If you can avoid these, you’ll save yourself a lot of pain.
1. Create an Exit Strategy from the Cycle
I used to visit Las Vegas a
7:51 PM • Aug 5, 2025
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Today’s email was written by Edgy and Yayya.
DISCLAIMER: I’m NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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