Morpho is an on-chain, peer-to-peer layer built on top of lending pools. It was launched in 2022 with initial support for Compound pools and subsequently for Aave. Lenders and borrowers enjoy better rates when supply and demand match on Morpho but otherwise get direct exposure to the underlying money markets.
Existing protocols like Compound and Aave are inefficient when utlitization is low. Borrowers pay higher rates and lenders receive lower rates than they would if they were matched directly. Morpho offers 100% utilitization while maintaining the liquidity offered by traditional pools.
Morpho's total value locked (TVL) has quickly grown to over $100 million prior to the release of its governance token, MORPHO. Multiple security audits have been conducted by respected auditors including Trail of Bits, Certora, ChainSecurity, and others. Morpho maintains a bug bounty program.
OUSD's Morpho strategy collects MORPHO tokens, and collects and sells passthru COMP tokens. The resulting stablecoins are added to the OUSD vault and distributed as yield.
Official site
Developer docs