Ask people to list history’s greatest rivalries and they’ll all pull from the same shallow bucket of antagonists: FC Barcelona and Real Madrid. Tupac and Biggie. Morpho and Aave. 

We kid, but the bad blood is real. For years, former Aave DAO delegate Marc Zeller bashed Morpho as a risky venue for lending and borrowing crypto. (Zeller has since left Aave DAO over a dispute with the founder of the Aave protocol). 

Aave was the incumbent, the giant. At the beginning of 2026, it was the largest DeFi protocol in the world, with $31 billion in user deposits — and that was before factoring in another $20 billion in active loans. Morpho was the upstart, though it quickly surpassed rival lenders. In 2024, just two years old, it became the second-largest lending protocol on Ethereum. 

But this year, something remarkable happened: According to one measure, investors now seem to believe Morpho is the more valuable protocol. In our latest Spotlight, we examine whether the data supports their bet on the one-time upstart. 

On August 31, the Morpho and Aave tokens were neck and neck in terms of market capitalization, at $1.6 billion and $1.9 billion, respectively. More surprising still, the fully-diluted valuation of Morpho’s token — a figure that includes tokens that have yet to enter circulation — was $2.5 billion. Aave’s FDV was $2 billion. 

In other words, investors thought Morpho was worth more than Aave. Roughly $500 million more, to be exact.

But here’s what makes this surprising. The total value of crypto deposited in Aave was $30 billion, more than twice the amount of crypto deposited in Morpho. 

Fees told a similar story. In the three months ending August 31, Aave users paid twice as much in fees as did Morpho users — $400 million annualized to Morpho’s $201 million. 

Finally, investors who held the Aave token received a portion of those fees through a buyback-and-burn mechanism implemented in 2025. The Morpho DAO, meanwhile, was nowhere near activating the protocol’s “fee switch,” which would direct up to one-quarter of its fees to Morpho tokenholders. 

“Would a high-growth startup distribute revenue to shareholders instead of reinvesting in expansion? The answer is almost universally no,” founder Paul Frambot wrote in June 2025.

“It even took many of the largest tech companies, including Meta and Alphabet, 10 to 20 years before they started distributing dividends.”

So Morpho’s business is half the size of Aave’s and it doesn’t share any revenue with its investors. How could they possibly think it’s worth 25% more than Aave? 

It appears to be a bet on Morpho’s future. 

Crypto deposits in Morpho grew 54% between January and September, according to DefiLlama data. 

And that growth has accelerated every month since May. 

In June, deposits grew 2.3%. In July, they grew 7%. In August, 10.5%. When accounting for active loans, Morpho is now the third-largest protocol in decentralized finance, behind Aave and Lido. 

At the same time, crypto deposited in Aave shrunk by a third since the fourth quarter of 2025. There are two reasons: First, the Aave DAO was roiled by infighting. The second reason is the April hack of Kelp DAO, in which North Korean operatives stole nearly $300 million in crypto, deposited most of it on Aave, and borrowed large amounts of Ether they had no intention of returning. 

That left Aave with $177 million in bad debt. Despite a successful fundraising initiative that reimbursed depositors, the protocol never fully recovered from the capital flight the episode had triggered. 

It’s been a tough year for Aave. Still, it collects twice as much in fees as does Morpho and it sends a portion of those fees to its tokenholders. 

But what would happen if Morpho flipped its fee switch? To see the rest of our analysis, you can find the full report here.

Back in April, we interviewed Aerodrome contributor Chris Boulos. The protocol had recently reached a significant milestone by generating more than $1 in revenue per dollar of emissions. 

“We focus primarily on identifying areas where durable business models actually exist,” Boulos told us. “There are very few in this industry that genuinely work. We know DEXs work incredibly well.”

According to at least one measure, Aerodrome is in the midst of its best month since November. It has already generated $12.8 million in fees this month, nearly doubling its August figure and putting it a stone’s throw from November’s $14.8 million, according to DefiLlama data. 

See our full interview with Chris Boulos here.

Correlations are calculated from log returns built on 20-minute interval price points. A pair of tokens must have at least 30 aligned return observations in a given period. Positively correlated variables move together, negatively correlated variables move inversely to each other, and uncorrelated variables move independently of each other.

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