Ethereum Foundation has deployed 3,400 $ETH While this move to bring the token to Morpho seemed like a no-brainer to some, others wondered why Aave, the largest Ethereum DeFi protocol, agreed to do something that had never been done before.
in thread Posted today on March 18, 2025 by $ETH 1,000 in the safe with Morpho’s yield. $ETH This specifically applies to Morpho Vaults V2. This is a modern architecture for protocols built around contracts that cannot be upgraded or interfered with by administrators once deployed.
This movement is not an isolated event either. In October 2025, the Foundation had already committed to: 2,400 $ETH It offered around $6 million in stablecoins to Morpho, claiming it was part of a larger strategy to move away from regular sales. $ETH to fund their operations.
Criteria for implementation
In June 2025, the Foundation, through Wang Xiaowei, financial policy This is a set of requirements that all future on-chain deployments must meet before deploying the foundation.
Requirements include permissionless access, self-custody, open source licenses, privacy, an open development process, and what the documentation describes as “maximum trustless core logic.”
This policy is also explicit regarding licensing, stating that contracts must use free/free open source licenses (copyleft, such as AGPL, or permissive licenses, such as MIT/Apache). However, it specifically excludes licenses available from sources such as Business Source Licenses (BSL).
Fortunately, Morpho Vaults V2 and Morpho Blue V1 both operate under GPL 2.0.
See also Ethereum ($ETH) Derivatives market has passed the peak of capital inflows, indicating large price fluctuations again
The policy states that to ensure immutability, the Foundation will avoid “managed keys with broad privileges” and instead favor protocols where “the underlying logic of the protocol is either not upgradable or is managed by a highly decentralized, time-locked, and transparent process.”
Morpho also passes this requirement because V2’s core contract is completely immutable once deployed and cannot be administratively revoked of any kind.
The policy also named certain patterns that we do not support in the current DeFi space.
Apparently, this policy does not allow for “backdoor shutdown mechanisms, money extraction features, over-reliance on multisig and MPC, widespread whitelisting, and centrally managed and monitored UIs.”
He also said that these patterns “expose both DeFi markets and participants to systemic vulnerabilities.”
Why didn’t the Ethereum Foundation choose Aave?
The Ethereum Foundation does not mention Aave anywhere in today’s post or in its June 2025 policy document. But for skeptics, it’s hard not to read the language about administrative keys, backdoor extraction capabilities, and lack of governance transparency without drawing parallels to the crisis that has publicly rocked Aave since December 2025.
Apparently, swap proceeds from Aave’s CoW Swap integration were found in wallets controlled by Aave Labs (rather than DAO Treasury). Mark Zeller, founder of the Aave Chan Initiative and its most influential governance representative, estimated on February 25 that there were approximately $51 million in unapproved fees after releasing an audit of Aave Labs’ past funding.
See also Bernstein warns of unique risks facing Ethereum bonds
BGD Labs, which is responsible for building and maintaining Aave V3, also announced on February 20 that its contract would not be renewed after April 1, citing centralization concerns and Aave Labs’ apparent attack on V3 to promote V4.
The governance crisis reached its climax on March 1st, when the “Aave Will Win” funding proposal (calling for up to $42.5 million in stablecoins and 75,000 AAVE tokens) was passed. temperature check The approval rating was a narrow margin of 52.58%.
Zeller immediately disputed the results, claiming that 233,000 votes from a cluster linked to Aave Labs (including 111,000 tokens delegated by co-founder Stani Kulechov) determined the outcome, and that removing those votes would reveal a clear rejection.
2 days later, Aave Chan initiative announced I decided to leave the project completely.
What does this mean for Morpho?
Morpho is currently the only DeFi protocol that the Ethereum Foundation has invested in twice based on its current financial strategy. Boasting a total value lock (TVL) of $5.8 billion, the approval comes at a time when Morpho is already beginning to build organic momentum.
Within eight months, Coinbase had over $1 billion in Bitcoin-backed loan originations through the protocol. Additionally, Apollo Global Management has also agreed to purchase up to 90 million MORPHO tokens over four years through a partnership with the Morpho Association.
Nevertheless, the Ethereum Foundation’s policy only emphasizes that, apart from economic benefits, the deployment itself is indicative of the type of technological approach and governance model that the Foundation considers sustainable.
