Lido Proposes Morpho Blue Fork for Specialized Lending Market

Lido contributors have proposed Lido Lend, a decentralized lending market built on a modified Morpho Blue design and planned for launch in the fourth quarter of 2026.

The proposal requires approval from the Lido DAO. Unlike a general-purpose lending pool, Lido Lend would use isolated markets focused on blue-chip assets and correlated pairs such as stETH and Ether (ETH).

Each market would have its own rules so lenders can understand the conditions for participation and exit when utilization is full or liquidity becomes tight. The design would also include deposit screening intended to keep hacked funds and other bad collateral out.

Borrowing rules would allow leveraged “looping” positions to be unwound during market stress. The product is designed for passive, long-term lenders and professional borrowers, and would operate alongside existing lending markets.

The proposal points to Lido’s staking record as part of the rationale for the design, citing more than $25 billion staked as stETH and no major security incidents since the protocol began.

The plan follows Lido’s earlier plans for a security-focused lending market. The earlier proposal also outlined stricter asset selection, separated markets and predictable exit routes during periods of market pressure.

Technical specifications, market parameters and audit reports are expected in the coming weeks. The materials are due ahead of governance votes on the launch and the DAO’s acceptance of the protocol.