Morpho - Gauntlet USDC Core
What is Morpho?
Morpho is a trustless and efficient lending primitive with permissionless market creation.
It enables the deployment of minimal and isolated lending markets by specifying:
- one collateral asset,
- one loan asset,
- a Liquidation Loan To Value (LLTV),
- an Interest Rate Model (IRM),
- and an oracle.
The protocol is trustless and was designed to be more efficient and flexible than any other decentralized lending platform.
What is the benefits of Morpho?
Morpho 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.
What is Morpho’s Interest Rate Models?
Morpho is an Interest Rate Model (IRM) agnostic protocol, meaning it can support any interest rate model for its markets. In Morpho, the interest borrowers pay in a given market is defined by the IRM chosen at market creation among a governance-approved set.
Initially, this set is composed of one immutable IRM, the AdaptiveCurveIRM.
The AdaptiveCurveIRM is engineered to maintain the ratio of borrowed assets over supplied assets, commonly called utilization, close to a target of 90%.
In Morpho, the collateral supplied is not rehypothecated. Removing this systemic risk removes the liquidity constraints imposed by liquidation needs. It enables more efficient markets with higher target utilization of capital and lower penalties for illiquidity, resulting in better rates for both lenders and borrowers.
As with every parameter of a Morpho Market, the IRM address is immutable. This means that neither governance nor market creators can change it at any given time. As such, the AdaptiveCurveIRM is designed to adapt autonomously to market conditions, including changes in interest rates on other platforms and, more broadly, any shifts in supply and demand dynamics.
Its adaptability enables it to perform effectively across any asset, market, and condition, making it highly suitable for Morpho's permissionless market creation. Learn more
What is performance fee?
The Morpho Vaults protocol itself is governance-less, meaning Morpho governance is not involved in the operations of the protocol or individual Morpho Vaults.
A Morpho Vault is governed by the owner of the smart contract. As explained in the Role section, the owner can also assign one curator, one guardian, and multiple allocators to help manage the vault.
Morpho DAO can’t take fees on Morpho Vaults but Vaults owners can set a performance fee to their Morpho Vault. The fee works by taking a % of interest generated by the Vault. The maximum performance fee is 50%.
What are Morpho Vaults?
Morpho Vaults is a protocol for permissionless lending vaults built on top of the Morpho protocol.
Morpho Vaults serve two types of users. The MetaMorpho Factory allows risk experts to spin up noncustodial lending vaults, and Morpho Vaults provide users with a simpler way to lend on Morpho.
Type 1: For Lenders
Morpho Vaults offer users the same passive experience as traditional lending pools with the following notable improvements.
Curated Risk Profiles
Morpho Vaults offer a range of vaults with various risk levels instead of the traditional one-size-fits-all approach. This allows users to choose vaults that align with their general risk preferences/appetite. In traditional lending, pools are exposed to the riskiest asset in the pool. With Morpho Vaults, a lender can avoid exposure to long-tail assets by depositing in a vault that only lends against blue chip collateral.
Better Yields
Earn better yields from Morpho’s capital-efficient markets. Interest earned by suppliers are optimized by dynamically rebalancing across multiple markets with the best risk-return ratio.
Transparent
Morpho Vaults are noncustodial with immutable logic and verifiable onchain allocations. Risk curators are encouraged to share their processes with users, giving them more insight into the risk models and computations.
Type2: For Risk Experts/Protocols
Morpho Vaults pave the way for a new approach to risk management that is better for both risk experts and users.
Service users, not a DAO
Morpho Vaults enable risk protocols and experts to serve users directly instead of consulting for DAOs. This approach is a more scalable business model and is better aligned with users.
Permissionless infrastructure
Requires no code and is audited, lowering barriers to entry. Risk experts can create revenue-generating products with limited costs and effort. Benefit from Morpho SDK, front-end, rewards distribution, and other tooling.
How the net APY calculated?
To get the net APY as displayed in the Morpho Interface, one needs to understand the following.
Why Rewards APR?
The distinction between APY and APR is that APY takes into account the effect of compounding interest, while APR does not. In the case of rewards, the APR is the most relevant metric to consider, as rewards are not reinvested in users positions.
What are rewards?
Rewards are incentives provided by the Morpho DAO, market creators and/or curators to users, encouraging them to interact with Morpho markets.
The claimability of rewards earned through Morpho's rewards programs is based on an epoch system. Currently, epochs are weekly, this period is due to be shortened in the near future. When an epoch ends, the rewards accumulated during the previous epoch become claimable. There is no deadline to claim the rewards earned.
Disclaimer & Risk Notice
Helixbox solely provides a user interface and does not control any contracts, assets, or protocol functions from 3rd DeFi Protocols. This premium DeFi product’s smart contract operations and asset management are exclusively governed by Morpho Protocol, and the risks associated with its use are inherent.
User Interface Risks
User interface risks refer to the potential for users to misunderstand or misuse the Helixbox interface, leading to unintended actions or transactions. Helixbox is complex, involving multiple interconnected components and possible interactions. There is a risk that users may:
- Misinterpret information displayed on the App.
- Click incorrect buttons, resulting in unintended transactions.
- Fail to understand the full implications of their actions, which may lead to financial losses.
Helixbox is not an investment advisor. The information provided is for educational purposes only and should not be considered financial advice. Before making any investment decisions, please conduct your own research and consult a professional financial advisor.
By participating, you acknowledge that this investment carries inherent risks and involves engagement with Morpho Protocol. For a detailed breakdown of potential risks, please review:
By interacting with Helixbox and Morpho Protocol, I acknowledge and accept these risks and take full responsibility for my investment decisions.