Benefits of Morpho

Morpho (formerly known as Morpho Blue) is a trustless lending protocol that offers greater efficiency and flexibility than existing lending platforms. Its primitive design makes it the ideal building block for users and applications.

Trustless

Immutable: Morpho is not upgradable. The protocol will run and behave the same way forever.

Governance-minimized: Morpho Governance cannot halt the operation of a market or manage funds on users’ behalf, nor does it impose specific oracle implementations.

Simple: The protocol consists of only 650 lines of Solidity code. This simplicity makes it particularly easy to understand and safe.

Efficient

Higher collateralization factors: Morpho’s Lending markets are isolated. Unlike multi-asset pools, liquidation parameters for each market can be set without consideration of the most risky asset in the basket. Therefore, suppliers can lend at a much higher LLTV while being exposed to the same market risk as when supplying to a multi-asset pool with a lower LLTV.

Improved interest rates: Collateral assets are not lent out to borrowers. This alleviates the liquidity requirements for liquidations to function properly in current lending platforms and allows Morpho to offer higher capital utilization. Moreover, Morpho is fully autonomous, so it does not need to introduce fees to cover costs for platform maintenance.

Low gas consumption: Morpho is a remarkably simple protocol built in a singleton smart contract that groups every possible primitive market in the same place. This reduces gas consumption by 50% compared to existing lending platforms.

Flexible

Permissionless market creation: Morpho features permissionless asset listing. Markets with any collateral and loan assets and any risk parametrization can be created. The protocol also supports permissioned markets, enabling a broader range of use cases, including RWAs and institutional markets.

Permissionless risk management: Morpho allows for additional layers of logic to enrich its markets. More specifically, risk management can be built on top of the protocol to simplify the user experience for lenders.

For example, risk experts could build noncustodial vaults for lenders to earn yield passively. These vaults can allocate depositors liquidity to multiple markets on their behalf. This allows users to pass off the responsible of risk management to the vault rather than doing it themselves.

Developer-friendly: Morpho features several modern smart contract patterns. Callbacks enable liquidators and sophisticated users to chain advanced actions without any flash loans. Account management facilitates gasless interactions and account abstractions. Free flash loans on the singleton contract allow anyone to access the assets of all markets simultaneously with a single call, as long as they are repaid in the same transaction.