Morpho co-founder and CEO Paul Frambot said early on Sept. 26 that a third-party artificial intelligence (AI) marketing tool wrote and published a post from Morpho’s official X account describing curator businesses on the protocol as dependent on private distribution deals rather than onchain vault fees. Morpho removed the post and revoked the tool’s access to the account, Frambot said. Aave founder Stani Kulechov had already called it the most bearish take for $MORPHO holders.
The post attached figures to arrangements Morpho’s documentation describes only in general terms. Curators allocate depositor funds across Morpho’s lending markets and set vault risk parameters, and the fees they charge are the revenue model for firms including Steakhouse Financial and Gauntlet. Morpho’s documentation sets out three ways a distributor can take a cut of that revenue, one of them a legal contract settled offchain.
Eleven Distributor Integrations
The post, which The Defiant reviewed in a screenshot published by the account cryptographic, opened: “Protocol risk curation looks like a clean software business until you pull open the distributor contracts.”
It said Morpho had gone through 11 live distributor integrations in the prior week and that “most curator businesses are not yet self-sustaining from vault fees alone.” It described one retail integration charging 0% fees: “The protocol is manually funding a 7% target yield out of pocket just to keep the shelf space.” Another, it said, takes 25% of annual percentage yield (APY), split 80/15/5 between exchange, curator and middleware, leaving the curator 15% of that cut.
“Base vault fees won’t pay your team,” the post said. “Without offchain fee splits, custom wrappers, or protocol subsidies, the unit economics break. The business lives in the private distribution agreements, not the onchain fee switch.”
The screenshot shows the post about an hour old, with roughly 1,000 views. It is no longer on Morpho’s account. Frambot did not dispute its contents.
The Most Bearish Take
Kulechov quoted the screenshot at 6:42 p.m. ET on Sept. 25, 76 minutes after cryptographic posted it.
“They’re basically saying here that a 7% yield isn’t sustainable and is only there to pay for shelf space,” he wrote. “They’re also saying that neither their monetization model nor curator monetization will ever become sustainable onchain. Wild read, because this might be the most bearish take for their token holders.”
The two founders exchanged posts the day before, when Frambot proposed splitting onchain vaults into noncustodial and discretionary regulatory categories and Kulechov called the split self-serving. Cryptographic, who lists work at the credit protocol Avon, pushed back on that proposal too.
Blame the Marketing Tool
Frambot responded at 1:18 a.m. ET on Sept. 26.
“The tweet was neither written nor published by us. It originated from a third-party AI marketing tool,” he wrote. “We removed the post shortly after it went live and immediately revoked the third party’s access to the account. We’re still investigating exactly what triggered the post. Apologies for the noise.”
He did not name the tool, and did not say whether the figures in the post were accurate.
Cryptographic replied eight minutes later: “they admit the post was real but their explanation is that an AI marketing tool somehow came up with 11 distributor integrations, 0%, 7%, 25% and the 80/15/5 split? Cool. Where did the AI get the numbers from?”
Glen, who lists work on lending at Kraken and Ink, wrote: “A ‘third-party AI marketing tool’ has access to confidential deal terms? And direct post access on main account?”
Kulechov had not responded to Frambot’s explanation as of publication.
What the Docs Say
Morpho’s documentation supports the structure the post described. The page on how distributors generate revenue lists a fee wrapper layered on an existing vault, an onchain splitter contract, and an offchain agreement in which partners negotiate a legal contract and settle through periodic payouts. It gives “50/50 on performance fees” and “60% curator / 40% distributor” as illustrative splits.
Vault fees are set by the curator. Morpho’s fee documentation caps the performance fee at 50% of generated interest and the Vaults V2 management fee at 5% a year. Morpho’s Curators Explained post says curators “can also partner with distributors (for example, fintechs or platforms) and enter into revenue-sharing agreements.”
DefiLlama lists Steakhouse Financial with $2.6 billion in total value locked (TVL) and $407,000 in revenue over 30 days. Gauntlet shows $1.62 billion in TVL and $36,500 over the same period.
Zero Protocol Revenue
The fee switch the post referred to sits with Morpho governance. The protocol’s governance documentation gives the decentralized autonomous organization (DAO) the power to activate it, capped at 25% of interest paid by borrowers. DefiLlama lists $19 million in fees over 30 days against $0 in protocol revenue, with borrow interest and liquidation fees going to lenders and liquidators. Monthly incentives run about $490,000.
The deleted post did not name the retail integration charging 0% fees. Morpho’s account posted on Sept. 25 that Robinhood Earn, curated by Steakhouse Financial, holds more than $500 million in deposits, and Robinhood’s page advertises an estimated 7% APY on USDG lent through Morpho. The Defiant reported in July that Robinhood pays the gap between organic yield and the 7% target for a year.
Where the Two Protocols Stand
Morpho holds $11 billion in TVL across 45 chains, up 16% over 30 days, with $5.43 billion in active loans, DefiLlama data shows. Aave holds $19.3 billion.
$MORPHO traded down 6.6% over 24 hours and 2.3% over seven days, according to CoinGecko. AAVE rose 5.4% and 7.8% over the same periods.
