Morpho and Aave Drive Base Lending Surge to Record $2.75 Billion

Base's lending total value locked (TVL) has reached an unprecedented $2.75 billion, according to Artemis' reports. This record reflects the rapid growth of credit on Coinbase's Layer 2 network and the share of Morpho and Aave in it.

The outstanding loans on Base peaked at $2.75 billion on September 10 after a surge in lending activity in late August. Morpho accounts for significantly about $3.94 billion, while active loans worth approximately $1.93 billion are given out by it. Aave V3 follows the race with TVL of around $513 million and active loans worth $354 million.

Base's lending market share is not an unusual one, as Galaxy's estimate of total DeFi lending TVL was around $39.9 billion in July, with a combination of both Aave and Morpho accounting for 53.1% of the share. The total TVL according to Galaxy stood at about $13.9 billion for Aave and $7.3 billion for Morpho.

Coinbase's partnership with Morpho has contributed significantly to Base's lending capability. Coinbase manages customer relations, while Morpho provides all of the on-chain infrastructure. This arrangement allows qualifying customers to borrow $USDC versus crypto on Coinbase's platform, with low rates as low as 5%.

The growth in lending on Base highlights a risk: the concentration of lending activity on a small number of protocols and collateral markets. The increasing dependence on Morpho and Aave makes smart-contract, oracle, curator, and collateral-risk controls more important.