Financial technology (Fintech) companies may move away from traditional lending services, as decentralized alternatives offer more accessible loans with smaller fees.

Decentralized finance (DeFi) lending protocols enable users to lend and borrow their cryptocurrency for passive income in a permissionless manner, via smart contracts instead of numerous financial intermediaries.

The growing efficiency and accessibility of DeFi lending protocols may inspire more fintech companies to opt for them over centralized lending alternatives, according to Merline Egalite, co-founder of Morpho, the second-largest decentralized lending protocol.

He told Cointelegraph during an exclusive interview at EthCC 2025:

“Fintechs have realized that integrating DeFi is a strategic move. If they don’t do it, they will lag behind others because fintechs are competing on the UX and the product they give to users.”

“Fintechs are realizing that DeFi can provide a higher rate,” explained Egalite, adding that DeFi adoption can help financial institutions “provide the best financial products,” in terms of lending and trading.

This will inspire the lion’s share of global fintech firms to migrate to DeFi within the next three years, he added.

Related: Chainlink reveals compliance standard, targets $100T institutional crypto flows

Morpho is the crypto industry’s second-largest lending protocol, worth over $5.5 billion in total value locked (TVL) across 20 blockchains, behind AAVE’s industry-leading $31 billion TVL, DefiLlama data shows.

DeFi loans can present an important financial lifeline for global citizens without access to traditional banking infrastructure. 

Related: Trump administration mulls ‘debanking’ executive order: WSJ

DeFi’s permissionless nature helps bypass traditional banking restrictions

Increasingly more fintech firms are recognizing the advantages of DeFi’s permissionless nature, which removes financial intermediaries and centralized risks involved in the lending and borrowing process.

Fintech using traditional banking rails still risk losing their license or Application Programming Interface (API) access, Egalite said, adding:

“So are you hooked by large banks? In DeFi, you don’t fear that because there are no intermediaries. You just trust the code itself.” 

While fintech firms already recognize these advantages, regulated yield-bearing products may inspire even more financial institutions to explore DeFi lending in the future, added Egalite.

DeFi lending rose to a new cumulative all-time high of $66.7 billion in TVL on Friday, according to DefiLlama data.

AAVE protocol’s $31.7 billion TVL currently accounts for 47% of the total DeFi lending value, while Morpho’s $5.5 billion accounts for over 8.2%.

This marked a significant recovery for crypto lending, which saw a decline starting in 2022 when centralized finance (CeFi) lenders Genesis, Celsius Network, BlockFi and Voyager filed for bankruptcy within two years as crypto valuations fell.

Magazine: Crypto-Sec: $11M Bittensor phish, UwU Lend and Curve fake news, $22M Lykke hack

]]> https://earlybirdsinvest.com/fintech-firms-will-move-to-defi-lending-within-3-years-morpho-co-founder/feed/ 0 48298 https://earlybirdsinvest.com/c0ffeebabe-eth-outsmarts-hacker-in-morpho-labs-breach/ https://earlybirdsinvest.com/c0ffeebabe-eth-outsmarts-hacker-in-morpho-labs-breach/#respond Fri, 11 Apr 2025 18:16:04 +0000 https://earlybirdsinvest.com/c0ffeebabe-eth-outsmarts-hacker-in-morpho-labs-breach/

A white hat hacker stepped in to stop $2.6 million in crypto from being stolen after a security issue at Morpho Labs, a decentralized lending company.

The funds were targeted after Morpho Labs pushed a front-end update to its Morpho Blue app, its decentralized finance (DeFi) platform, on April 10. That update introduced a flaw, and a hacker had found a way to take control of a wallet and drain it.

According to a report shared by PeckShield, a blockchain security company, the attacker managed to steal $2.6 million.

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However, someone using the name “c0ffeebabe.eth“, known for ethical MEV (maximal extractable value) actions, front-ran the hacker’s transaction. This means they intercepted the stolen funds before they reached the attacker.

After the incident, Morpho Labs rolled back the update. In an April 11 post on X, the team confirmed it had been informed about the issue and took steps to fix it. They said all user funds within the main Morpho Protocol were safe and unaffected.

The team also noted that the front-end is now secure, and users do not need to take further action.

The update that caused the issue was meant to improve how transactions are handled. However, the change ended up generating some transactions incorrectly, which opened the door for the exploit. Morpho Labs said that it has found the problem and fixed it.

Meanwhile, cybersecurity firm Kaspersky recently reported that hackers are distributing fake Microsoft Office add-ins on SourceForge. What did they do? Read the full story.

Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
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