Morpho Overview

Introduction

Morpho is a decentralized lending protocol with different entities and individuals contributing to its development and adoption. As a result, the documentation refers to different areas of “Morpho” which are worth distinguishing.

• The Morpho Protocols: Decentralized, noncustodial lending protocols implemented for the Ethereum Virtual Machine.

• The Morpho Interfaces:
  Multiple web interfaces allowing easy interaction with the Morpho protocol. See the app ecosystem for the apps built on Morpho.

• Morpho Governance:
  A governance system for governing the Morpho Protocol, enabled by the MORPHO token.

• Morpho Association:
  A France-registered association that regroups the main contributors to promote the development and the decentralization of the Morpho Protocol. The Morpho Association hosts one of the Morpho Interfaces.

Morpho

Morpho is a decentralized, noncustodial lending protocol for overcollateralized lending and borrowing of crypto assets (ERC20 tokens) on the Ethereum Virtual Machine. It comes as two protocols, Morpho Blue and Morpho Midnight, both built from immutable smart contracts that serve as a base layer for lenders, borrowers, and applications. Anyone can create a market, and once deployed the contracts keep working as long as the blockchain exists.

Borrowers provide collateral to borrow other assets. Anyone can lend or borrow on Blue markets, while a Midnight market can limit who lends or borrows with an optional entry gate. Users keep ownership of their assets at all times.

Blue and Midnight

Morpho has two lending protocols: Variable Rate Markets (Blue) and Fixed Rate Markets (Midnight). They coexist and are complementary.

Feature	Morpho Blue (Variable Rate Markets)	Morpho Midnight (Fixed Rate Markets)
Rate	Variable, set by utilization through an interest rate model	Fixed for the term, set by the price of offers
Term	Open, no maturity	Fixed maturity date
Collateral	One collateral asset per market	One or more collateral assets per market
How you lend or borrow	Supply to or borrow from the market directly	Take an offer published by a maker, or publish your own offer; positions are accounted at market level, not as bilateral loans
Exit early	Repay at any time; withdraw at any time, subject to available liquidity	Take an opposite offer, subject to available offers, or publish your own; borrowers can also repay directly at any time
Access	Open to anyone	Open to anyone, unless the market sets an entry gate; gates never block exits
Liquidation	When a position is unhealthy	When a position is unhealthy, or when debt is unpaid after maturity
Market design	Isolated, immutable markets that anyone can create; noncustodial