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 (formerly known as Morpho Blue) 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.