Morpho Blue

Lending

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

Risk Rating

Good

Protocol Code Quality

Protocol Maturity

Protocol Design

What is Morpho Blue?

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

Documentation
Auditors
- Audits
- Audits
Please see our FAQ on experienced auditors

Info

Website
Tags: Lending

Key Metrics

TVL: $2.9B (Rank #13)
TVL Ranking by Lending: #4
Blockchain: Ethereum, Base
Chain TVL
- Ethereum: $2.54B
- Base: $329.61M

Risk Assessment

Good

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 over six months reduces technical risk as smart contracts are moderately 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.