How Morpho Survived a $300M DeFi Hack With Only $1M Exposure

Unchained

Laura Shin

Tech News, Business News, News

4.6 • 1.3K Ratings

🗓️ 28 April 2026

⏱️ 38 minutes

🔗️ Recording | iTunes | RSS

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Summary

People think of Aave and Morpho as competitors. But Morpho only lost $1 million when North Korea drained $300M from a DeFi protocol. The architecture explains why. ======================================================== Thank you to our sponsors! Coinbase One 20% off first year of annual plan + $50 Bitcoin bonus. Offer valid until May 31. coinbase.com/unchained Citrea Bitcoin changed how money works. Satya changes how Bitcoin scales. citrea.xyz/unchained Ether.fi 15% cash back on food and ride apps, 3% on everything else. ether.fi/unchained ======================================================== After North Korea's Lazarus Group drained nearly $300 million from Kelp DAO's bridge, the contagion spread fast, leaving close to $200 million in bad debt on Aave. Morpho, one of the largest lending protocols in DeFi, ended up with about $1 million in exposure. Paul Frambot, co-founder and CEO of Morpho, explains why the protocol's modular, isolated architecture produced a different outcome, and what it reveals about how DeFi lending is supposed to work. He also addresses the ongoing debate over whether DeFi lenders are fairly compensated for risk, the institutional reaction to the hack and what it means for the sector's timeline, the moral complexity of Arbitrum's decision to freeze stolen funds, and why formal verification may be DeFi's last line of defense in an age of increasingly powerful AI. Host: ⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: ⁠Paul Frambot, Co-founder and CEO of Morpho Labs Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hi everyone, welcome to Unchained, your no hype resource for all things Crypto.
0:06.0	I'm your host, Laura Shin.
0:08.0	Thanks for joining this live stream.
0:10.0	Before we get started, a quick reminder, nothing you hear on Unchained as investment advice.
0:13.0	This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed in the show.
0:19.0	For more disclosures, visit UnchainedCrypto.com.
0:21.9	Bitcoin changed how money works. Satrea changes how Bitcoin scales. With a trust-minimized
0:26.9	BTC and a native staple coin, CTUSD, Citraia enables Bitcoin capital markets with lending, privacy,
0:34.5	Bitcoin yield, and more. Get started at Citra.xyz slash unchained. Etherfi is giving
0:40.3	unchained listeners 15% cash back on food and ride apps, and that's on top of the 3% you get on
0:46.1	everything else. Your bank is charging you to use your own money. I switched. Go to ether.fi
0:51.5	slash unchained to claim your discount.
0:58.7	Today's guest is Paul Frambeau, co-founder and CEO at Morpho.
0:59.6	Welcome, Paul.
1:02.0	Hey, thanks for having me.
1:08.2	We've had quite a series of dramatic events over the last week and a half in Defi,
1:12.7	since North Korea's Lazarus Group drained almost $300 million worth of R.TH from Kelpdow's Layer Zero Bridge. It then used that RSEA as collateral in AVE,
1:19.5	leaving almost $200 million in bad debt. Meanwhile, Morpho had only about $1 million worth
1:26.1	of ETH borrowed against the RSEth in two isolated markets. How did Morpho had only about $1 million worth of ETH borrowed against the RS EF in two isolated markets.
1:30.4	How did Morpho manage to fare nearly unscathed?
1:35.0	Yeah, I guess, you know, the first thing to understand with Morpho and the main difference
1:40.8	with like other lending protocols out there, like Abe, is that Morpho does not manage assets or does not choose which collateral assets are being underwritten.
	...

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