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Improved Capital Efficiency
As explained, Morpho improves the capital efficiency of lending protocols with an on-chain P2P optimization layer.
When lending on a pool directly, capital is, on average, utilized at 40%. It means that 40% of the funds you are lending are borrowed. With Morpho, when a match happens, the capital efficiency of the loans reaches 100%. If no match has happened yet, then the user is put on the pool with its capital efficiency.
The higher capital efficiency of Morpho is directly traduced in higher rates for lenders and lower rates for borrowers, as shown in the illustration below.
Last modified 1yr ago