Compound Labs is marching ahead with plans to tap into its competitor Morpho

The new vaults went live on March 13 at 11:30 a.m. Eastern Time. It comes after a governance proposal aimed at bringing Morpho (MORPHO)-powered vaults to Polygon (POL).

Decentralized finance protocol Compound has launched new lending vaults on Polygon. The vaults went live today at 11:30 a.m. Eastern Time.

It follows a governance proposal aimed at bringing Morpho (MORPHO)-powered vaults to Polygon (POL).

Gauntlet and Compound (COMP) are launching the new lending vaults with $3 million in incentives - $1.5 million each from Compound and Polygon.

While this move has already been a major talking point for COMP holders and the broader DeFi community, the announcement signals a significant shift in the decentralized lending space.

Essentially, Compound is transitioning from its own technology stack to Morpho’s infrastructure - a major development in the DeFi landscape.

Morpho co-founder and CEO Paul Frambot described the development as a “full-circle moment.”

“We’ve come full circle with Compound choosing to build on Morpho. Morpho started as an optimizer on top of Compound before evolving into a fully independent lending primitive. Now, Compound is transitioning to build on Morpho,” Frambot noted.

In January, Gauntlet introduced the proposal targeting the new lending vaults on Polygon. The platform viewed the collaboration as a strategy to improve risk controls, accelerate asset listings, and offer a sustainable path forward for Compound.

The move comes as Aave is rolling out v4 of its protocol, which is expected to further shrink Compound’s revenue and market size.

Using Morpho to generate the yield, criticized by others, is a pathway to benefiting COMP holders, according to the governance proposal.

Compound will leverage Morpho’s lending infrastructure, Gauntlet’s risk management framework, and Polygon PoS’s low fees and deep liquidity to reshape the on-chain lending landscape.

Morpho, which raised $50 million in a funding round led by Coinbase Ventures and a16z earlier this year, has a total value locked of over $3 billion.

Aave has a TVL per DeFiLlama of over $17 billion and Compound’s is $2.3 billion.