Overview

Morpho Vaults is an open-source (GPL) protocol for permissionless risk curation on top of Morpho. The MetaMorpho Factory is a contract deploying ERC4626-compliant Morpho Vaults. Each vault has one loan asset and can allocate deposits to multiple Morpho markets. Morpho Vaults are noncustodial and immutable instances. Morpho Vaults offer users a way to provide liquidity and earn interest passively. Vaults have a system to automate risk management so that users are not required to make these decisions. Instead, the vault actively curates a risk exposure for all deposited assets. The vaults operate in a noncustodial way and users maintain full control over their assets. Users can look at the state of the vault at any time and withdraw their liquidity at their discretion.

Motivation

Morpho is a trustless primitive prioritizing efficiency and flexibility over end-user experience. Lending to Morpho markets is more complex than on Aave and Compound. On Morpho, suppliers must consider multiple factors, including collateral assets, liquidation LTV, oracles, and caps. Compared with Aave where all the decisions are made by governance on the suppliers’ behalf. As such, interacting with Morpho directly is more suited to sophisticated lenders than passive lenders. Morpho Vaults facilitate the supply of liquidity to Morpho markets. Users can delegate risk management to a vault which can automate and decentralize these decisions, similar to platforms like Aave or Compound, making for a more passive experience.

Permissionless Risk Management

Anyone can use the MetaMorpho Factory to create a Morpho Vault. There is no restriction on who can create a vault. Risk experts, DAO, protocols, etc. can all leverage the open infrastructure to provide passive users with a simple lending experience.