Morpho V2 was developed in response to DeFi infrastructure challenges, particularly the need to overcome rigid interest rate formulas and over-collateralization that limit scalability for institutional adoption.

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Yet, current onchain infrastructure still forces compromises on both sides.

But DeFi infrastructure needs to surpass certain on-chain confines such as a reliance on over-collateralization and fixed formulas for calculating rates in order to scale to institutional-grade potential.