Simplifying Isolated Markets

First, lending to isolated markets needs to be as simple as a lending pool.

When using a multi-asset lending pool, a lender only has one option, however, with isolated markets there could be several markets for one loan asset. For example, Morpho could have five options to lend USDC: sDAI/USDC, wstETH/USDC, wbIB01/USDC, WBTC/USDC, and WETH/USDC.

In other words, lenders must manage their own risk by choosing their collateral exposure, Liquidation Loan-To-Value (LLTV) ratios, oracle, caps, etc.

Morpho Vaults eliminate the complexity of risk management by creating a single point of entry. Rather than requiring users to make multiple decisions, they can simply deposit USDC into a USDC Morpho Vault to allocate liquidity.

Not only does it make it easier to supply, but it helps to improve yield. As market conditions change, a vault can rebalance across markets to optimize interest earned by lenders.

In the end, Morpho Vaults provide users with the same simple user experience as a multi-asset lending pool with the benefits of lending to isolated markets.