Bankless · Wednesday, July 29, 2026
Early attempts at fixed-rate, fixed-term DeFi lending, such as Dharma, failed primarily due to insufficient liquidity and underdeveloped infrastructure, including high gas fees. Paul Frambot highlights that Morpho Midnight addresses these by leveraging existing liquidity pools and a more robust market structure.
“And so we've actually tried this before, but it never worked back then. And I think your answer is, well, we had not nearly enough market participants in the level of sophistication and liquidity in order to bootstrap that whole thing.”
“I think that's mostly right. I think there's a few reasons, three reasons. I think the design... So, okay, first thing is like gas at the time would not allow you to, you know, do crazy stuff, right? The second is the most important, which is the liquidity. And by liquidity, I mean the collection of participants that all together make markets active and easy to enter and leave without moving the price too much.”
“You did not have that at all back then, right? Right. And so, of course, like a product like Compound, when it came out that, you know, provides you that simple user experience was a much broader product market fit because the market at the time was like basically us with our MetaMask wallet, right? And we knew nothing about it.”