Shared Liquidity

Morpho vaults combine the best of isolated markets and multi-asset lending pools to create a better way to lend. Over time, it is anticipated that Morpho vaults will emerge as the standard lending solution.

The Morpho Approach

There are two main approaches to structuring lending markets in decentralized finance: lending pools and isolated markets. The former excels in providing a straightforward user experience and aggregates liquidity but lacks the efficiency and flexibility needed for significant scalability. Conversely, the latter unlocks notably higher levels of efficiency and flexibility but introduces a more complex user experience and liquidity fragmentation.

Thus, the question arises: How does one combine the simple user experience and aggregated liquidity of lending pools with the efficiency and flexibility of isolated markets?

The answer: Morpho Vaults & Morpho.

Morpho is a remarkably simple and immutable lending primitive that enables the permissionless creation of isolated markets. Morpho Vault is a separate protocol for creating Morpho Vaults (lending vaults) on top of Morpho.

Although built independently, Morpho Vaults are fully integrated into Morpho. At the base layer, Morpho provides efficient, secure, and flexible isolated markets. Built on top, Morpho Vaults simplify the lending user experience and aggregate liquidity offering users the best of both isolated markets and lending pools.