Morpho Blue

Lending

Morpho Blue is a trustless and efficient lending primitive with permissionless market creation.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Morpho Blue enables permissionless pooled lending, combining risk-isolated pools with a risk management layer. This structure not only isolates risk between assets but also prevents liquidity fragmentation, allowing for a liquid money market for any token.
What we like less
The reliance on risk managers for risk management and asset allocation introduces a new layer of trust. Additionally, the new lending markets still don't feature any reserves accrual for potential bad debt.
What it means for you
Morpho Blue offers greater flexibility and control over your DeFi lending experience. You can tailor your exposure according to your risk/reward preferences, potentially leading to optimized yields while engaging with a wide range of assets.

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Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $1B (Rank #25)
  • TVL Ranking by Lending: #6
  • Blockchain: Ethereum, Base
  • Chain TVL
    • Ethereum: $1B
    • Base: $43.64M
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors; Spearbit and OpenZeppelin
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2024; maturity less than six months increases technical risk as smart contracts are less battle-tested
  • Top 20% by total value locked slightly reduces risk
  • Core contracts require on-chain voting for parameter updates
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Isolated markets enable asset risks to be contained to each individual pool without impacting the entire protocol
  • Robust controls in place to prevent risky borrowing
  • Basic mechanisms in place to incentivize liquidations
  • No reserves or no stability module
Things to know about Morpho Blue

What is Morpho Blue

Morpho Blue is a trustless lending primitive with permissionless market creation and permissionless risk management with MetaMorpho (permissionless risk curation built on top of Morpho Blue). It enables the deployment of isolated lending markets that feature one collateral asset, one loan assets, a liquidation loan-to-value (LLTV), an oracle, and an interest rate manager (IRM). Each parameter is selected at market creation and persists in perpetuity. In other words, contracts on Morpho Blue are immutable. Once a market is created, users can either lend/borrow assets to/from it with certainty that it will persist as long as Ethereum exists and the parameters of the market will never change.

How Morpho Blue makes money

Morpho Blue currently does not take any fees, but there is a fee switch built into the contract that can be activated (per market) via governance. Once activated, revenue from fees will accrue directly to the Morpho DAO.

How you make money on Morpho Blue

As a lender, you earn by depositing assets into Morpho Blue's MetaMorpho vaults, which then allocate your funds across select lending pairs to earn yield. Your earnings are enhanced through optimized asset allocation and risk management by MetaMorpho vault managers.

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Morpho Blue Pools
Morpho Blue USD Lending
7%
Yield
$52M
TVL
Risk
B
Protocol
Morpho Blue
Chain
Ethereum
Morpho Blue ETH Lending
2.2%
Yield
$35M
TVL
Risk
B
Protocol
Morpho Blue
Chain
Ethereum
Morpho Blue USD Lending
7%
Yield
$3M
TVL
Risk
B
Protocol
Morpho Blue
Chain
Ethereum

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