Morpho Restructures to Align Token Value with Company Equity

As the regulatory environment becomes more favorable, DeFi protocols and companies are getting more comfortable with driving direct value to their tokens, but while many protocols are engaging in token buybacks, lending protocol Morpho is taking a slightly different approach.

Morpho CEO and co-founder Paul Frambot published an article on Friday, revealing that Morpho Labs is set to become a wholly owned subsidiary of the Morpho Association, ultimately owned by MORPHO token holders.

Unlike the popular token buyback business model employed by protocols like Hyperliquid or Sky/Maker, Morpho will reinvest protocol fees directly into the product itself. Frambot claims that reinvesting protocol fees instead of distributing them will “generate exponentially more value for the network.”

In addition to network growth, the goal of the restructuring is to address any perceived conflicts of interest between equity holders in Morpho Labs and token holders. Through this move, any value accrual to Morpho Labs is directly aligned with the value of the MORPHO token via the Association and the DAO.

French nonprofit laws prohibit the Morpho Association from having shareholders and externally distributing profits. As a result, Morpho Labs, a French joint-stock company, is conducting a 100% share transfer to the Association, making it a wholly owned subsidiary.

Frambot also cited a desire to operate Morpho as a company in its scale-up stage. According to Frambot, the scale-up stage requires the company to choose between “insignificant distributions today or exponential growth tomorrow.”

The MORPHO token is up around 8% since the article was published. The token has been rangebound since its release in March 2024, when it launched at $1.2.

Despite the underwhelming token performance, Morpho’s total value locked is approaching its January all-time high of $4 billion, a 560% increase since the beginning of 2024.