Fixed Rate Markets (Midnight)

Integrating Morpho Midnight into your application means implementing the infrastructure that allows users to lend at fixed rates and borrow at fixed rates across isolated, fixed-term markets.

Unlike variable rate lending where rates fluctuate every block, Midnight rates are locked at the moment of the trade. Each unit represents a claim on (or obligation to repay) exactly one loan token at maturity. The rate emerges from the price at which units are traded, not from an interest rate model.

Key Integration Components

When building fixed-rate earn and borrow products with Morpho Midnight, you need to integrate four main components:

1. Market discovery and selection: Let users browse isolated fixed-term markets by chain, loan token, maturity, accepted collaterals, and available bid/ask liquidity.
2. Quote and execution flows: Fetch takeable offers, apply price/slippage protections, and execute offers.
3. Position and risk tracking: Show users their credit, debt, collateral, maturity, pending fees, liquidation risk, and transaction history.

Integrating Midnight gives users access to:

1. Fixed-rate lending and borrowing: Rates are locked at execution because users trade units at a specific price. Lenders know the return they are targeting, and borrowers know the repayment obligation they create.
2. Isolated fixed-term markets: Each market is defined by one loan token, one maturity, and a fixed accepted-collateral set. Market parameters are immutable after creation, which makes risk easier to reason about.
3. Fungible credit and debt units: Positions are denominated in units. Credit units represent claims on loan tokens at maturity; debt units represent obligations to repay loan tokens.
4. Secondary liquidity: Lenders can sell credit units before maturity, and borrowers can buy units to close debt before maturity, depending on available market liquidity.

Assets Flow - Lend

Understanding the lending flow is essential for a clean Earn integration:

1. Browse markets: The user selects a market by chain, loan token, maturity, accepted collateral set, among many other parameters of interest.
2. Estimate return: The app converts ask prices for the selected market into implied fixed rates.
3. Get a quote: The Router returns executable takeable offers for the requested lend size and slippage, including fallback liquidity in case offers are consumed before execution.
4. Buy credit units: The user takes asks and spends loan tokens to buy credit units. Each credit unit is a claim on one loan token at maturity.
5. Track position: The user’s position shows credit, pending fees, cost basis, effective rate, and any loss factor.
6. Exit or redeem: Before maturity, the user may sell credit units through secondary liquidity. At or after maturity, credit can be redeemed 1:1, net of fees and losses.

Assets Flow - Borrow

For borrowing integrations, the flow is symmetric but risk and collateral management are central:

1. Browse markets: The user selects a market by chain, loan token, maturity, accepted collateral set, among many other parameters of interest.
2. Estimate cost: The app converts bid prices into implied fixed borrow rates. The highest bid is the best available price for the borrower.
3. Supply collateral: The borrower deposits accepted collateral. Borrowing capacity depends on the value of each collateral multiplied by its LLTV.
4. Fetch a quote: The Router returns executable takeable offers against bids for the requested borrow size.
5. Sell units: The borrower takes bids, sells debt units, and receives loan tokens. The debt amount is the number of units owed at maturity.
6. Monitor health: The position remains healthy while maxDebt ≥ debt. If debt exceeds maxDebt before maturity, the position can be partially liquidated. After maturity, unpaid debt can be partially or fully liquidated.
7. Repay or exit: The borrower can repay at maturity or buy units on the secondary market before maturity to close debt early.

Functional Integration Requirements

For a complete Midnight integration, your system needs to implement:

1. Read Operations:
   • Query market definitions and live market state.
   • Fetch books, bids, asks, quotes, and takeable offers.
   • Display user positions, transactions, collateral balances, credit, debt, pending fees, and effective rates.
   • Show fees and maturity status.
2. Write Operations:
   • Handle token approvals, permits, and Midnight Bundles authorization.
   • Execute lend, borrow, repay, collateral supply, collateral withdrawal, and secondary exit flows.
   • For makers, publish signed offers and validate offer payloads before broadcasting.
3. Monitoring Capabilities:
   • Track position changes, offer consumption, transaction status, market liquidity, and liquidation events.
   • Alert users to maturity, deteriorating collateral health, failed quotes, exhausted liquidity, or rejected offer payloads.

Risk Considerations

A complete Midnight integration should help users understand:

1. Market isolation risk: Each market has its own maturity, loan token, and fixed collateral set.
2. Collateral risk: Lenders are exposed to the full accepted collateral set of a market, not only the collateral currently posted by borrowers.
3. Liquidation risk: Borrowers can be liquidated if debt exceeds maxDebt before maturity, and unpaid debt can be fully liquidated after maturity.
4. Liquidity risk: Secondary exits and quote execution depend on available offers. Offers can be consumed before a transaction lands.
5. Oracle risk: Collateral health depends on oracle prices used to value collateral.
6. Fee risk: Settlement fees affect taker execution prices, while continuous fees reduce lender credit over time.
7. Bad debt risk: If liquidation does not fully cover debt, losses can be socialized to lenders through the market loss factor.

UX Requirements

What your interface should surface

1. Show both price and rate: Users trade units at a price, while the app usually presents the result as an implied fixed rate.
2. Distinguish asks and bids: Lenders take asks; borrowers take bids. Make this clear in the UI.
3. Explain maturity: Users should understand what happens before maturity, at maturity, and after maturity.
4. Show execution protection: Display slippage, worst acceptable price, minimum units for lenders, or maximum units for borrowers.
5. Surface collateral exposure: For lend products, show the market accepted collateral set. For borrow products, show collateral requirements.
6. Attribute Morpho: Include a clear “Powered by Morpho” mention and appropriate protocol disclaimers in the user flow.

Brand & attribution

• Surface “Powered by Morpho” on the screens where users actually interact with Morpho functionality. Integrators who get this framing right tend to have cleaner regulatory conversations and clearer user support.
• The official powered-by-morpho web component or the official static badge both work. If either does not fit a surface, contact the support team so the asset pack can be adapted rather than rebuilding the mark.
• Matching the badge theme to the UI surface (light on light, dark on dark) tends to read best.
• Somewhere reachable from the badge, users benefit from seeing the short disclaimer. The web component does this via tooltip.

Reference. https://brand.morpho.org / snippet.js