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Enabling Diverse Risk Profiles

Going beyond one-size-fits all​

Every user has their own tolerance for risk, while each collateral asset has a set of associated risks, some with more than others.

For that reason, users with a lower risk tolerance may prefer to avoid lending against certain collateral assets, whereas it may be the opposite for users with a greater appetite for risk.

However, a core limitation of multi-asset lending pools is that all users are forced into a one-size-fits-all risk profile, regardless of their risk appetite.

One-size-fits all

The above illustrates how every lender to a multi-asset pool is exposed to every collateral asset in the pool: wstETH, WBTC, LINK, USDT, sDAI, DAI, rETH, RPL, AAVE, USDC, LINK, etc. There is no option to lend against specific collateral or a combination of collateral assets aligned with one's tolerance for risk.

Catering to any risk profile​

Morpho Vaults are built on top of Morpho’s isolated markets with each vault having a unique risk profile determined by the markets they lend to.

Lenders can choose to deposit in vaults that best align with their risk appetite. Users with a higher risk tolerance can deposit in a vault that lends to “riskier” markets and vice versa.

Different Risk Profile

For example, the chart shows three different lenders depositing into three different vaults:

  • USDC Vault lending to wstETH/USDC & wbIB01/USDC.
  • ETH Vault lending to wstETH/WETH & sDAI/WETH.
  • ETH Vault lending to weETH/WETH, osETH/WETH, and swETH/WETH.

Each lender can deposit into one or more vaults to tailor their risk exposure:

  • Lender #1 has exposure to wstETH (crypto) and wbIB01 (RWA) markets.
  • Lender #2 has exposure to wstETH and sDAI markets.
  • Lender #3 has exposure to weETH, osETH, and swETH markets.

Here, lenders can opt in and out of certain markets by selecting specific vaults. This architecture enables a level of flexibility unattainable by traditional lending pools. It can scale to any number of vaults, markets, and risk profiles catering to any risk profile imaginable.

Any Risk Profile