Oracle-Agnostic Pricing

For a lending protocol to operate, it needs an accurate notion of price.

Oracles are the primary method for querying a price feed from an external source. They provide frequent and accurate pricing, taking into account many data points and diverse feeds. Determining a price without using oracles requires a lending protocol to have internal trading markets, also known as an oracle-less approach. However, this brings additional complexity, increasing gas consumption and compromising auditability and security.

To avoid compromising efficiency and security, Morpho (formerly known as Morpho Blue) is oracle-agnostic rather than oracle-less. The protocol has no oracle or trading mechanism built into it. Rather, anyone can create a market by specifying an address that returns the price for loan and collateral assets. Some markets can feature oracles such as Chainlink, Redstone or Uniswap, while other markets may have prices hardcoded or use a mechanism similar to the one seen in Ajna.

With this design, Morpho remains simple, trustless, and flexible while ensuring users can still benefit from the efficiency of oracles.