Morpho

Wiki Powered byIconIQ
Morpho

We've just announced IQ AI.

Check it out

Morpho

Morpho is a decentralized, noncustodial lending protocol implemented on the . It is designed to facilitate overcollateralized lending and borrowing of assets. It functions as an immutable layer for users and applications, enabling the creation of isolated lending markets. [2]

Overview

is a decentralized lending protocol built on the . It allows users to lend and borrow assets trustlessly, non-custodially, and overcollateralized. It operates through immutable smart contracts that serve as a foundational layer for applications, enabling open participation from any user without intermediaries. The protocol supports and tokens and includes core mechanisms such as management, protections based on loan-to-value ratios, and dynamic interest rate adjustments driven by market conditions.

The ecosystem is composed of several distinct components. The Protocol refers to the facilitating lending and borrowing operations. Interfaces are web-based frontends that allow users to interact with the protocol. Governance is a decentralized system governed by holders of the token, giving the community control over decisions like protocol upgrades. is the original development entity responsible for building the protocol and related tools. Finally, the Association, a registered non-profit in France, coordinates contributors—including Labs—and promotes the decentralization and development of the ecosystem.

is licensed under a dual licensing model (BUSL-1.1 and GPLv2). Once deployed, its are designed to run indefinitely if the underlying infrastructure persists. The protocol prioritizes composability, transparency, and security, aiming to create a robust, layer for lending markets in the decentralized economy. [1]

Morpho Association

The Association is a nonprofit organization based in France that supports the development and accessibility of the protocol. It brings together contributors and users to advance the protocol through funding initiatives and infrastructure support rather than direct software development.

Its responsibilities include hosting the main front-end interface of Morpho’s website, providing access for new users, and maintaining technical documentation to assist developers. The association also manages intellectual property related to open-source projects like -optimizers, which it publishes under a GPL3 license on the -org GitHub. While the association provides essential infrastructure, development is handled by entities such as and the Institut Louis Bachelier (ILB). [2]

Technology

Morpho Market

A Market is an isolated lending pool that pairs a single asset with a single loan asset. These markets are immutable, meaning their parameters cannot be changed after deployment, and they are designed to operate independently of one another, containing risk within each market. This structure ensures consistent and predictable behavior for both lenders and borrowers.

Each Market is created permissionlessly, requiring no governance approval, which supports rapid and decentralized expansion of the lending ecosystem. The rules governing lending and borrowing are transparent from the start, and the simplicity of having just one and one loan asset per market reduces complexity while improving risk management. As long as the underlying remains active, these markets remain functional and secure. [3]

Morpho Vault

Vaults is a protocol built on top of Markets that allows users to deposit assets into vaults and earn yield from borrowers multiple lending markets. Each vault is tied to a specific loan asset and automatically allocates deposits to various Markets to optimize returns. This setup removes the need for users to manage individual market positions or assess risk themselves, as vaults include automated risk management mechanisms that handle these decisions.

Vaults follow the tokenized vault standard, enabling compatibility and integration the ecosystem. Users retain full control over their funds and can deposit or withdraw anytime, depending on available liquidity. All operations are transparent and managed through clearly defined roles that handle risk curation and capital allocation. Vaults aims to simplify access to lending by offering a single, streamlined interface for generating passive yield with risk management handled by the protocol. [4]

Curator

In the ecosystem, a Curator is responsible for overseeing the strategic operation of a lending vault, with the primary goal of maximizing risk-adjusted returns for depositors. Curators determine which Markets to include in a vault, allocate capital, and actively manage associated risks. Their decisions affect the performance, yield, and security of the vaults they manage.

Curators handle market selection, rate optimization, and capital allocation, ensuring yields remain competitive while minimizing risk exposure. They monitor quality, price reliability, and liquidity conditions to avoid potential losses. Curators also communicate openly with users about vault performance and risk settings. Vaults operate under a broader management framework that includes additional roles—Owner, Guardian, and Allocator—each with defined permissions supporting the curator’s strategy and ensuring the system functions securely and transparently. [5]

Interest Rate Model

Morpho’s interest rate model (IRM) system is designed to be modular and governance-controlled, allowing different models to govern how interest is calculated in lending markets. Each Market selects an IRM at creation from a governance-approved set; this choice cannot be changed afterward. The IRM determines the rate borrowers pay and, in turn, what lenders earn. Borrow and supply are derived from the IRM’s per-second rate calculations and reflect the cost of borrowing and the yield for lenders, respectively. The system is designed to be transparent and predictable, with supply factoring in utilization and fees (currently set to zero). [6]

Adaptive Curve

The primary model currently in use is the AdaptiveCurveIRM, which aims to keep the utilization rate of a market (borrowed/supplied ratio) around 90%. This model comprises two mechanisms. First is the curve mechanism, which establishes short-term responsiveness: when utilization spikes, the interest rate rises sharply, and when it drops, the rate decreases. For instance, if the target rate is 4% at 90% utilization, then at 100% utilization, the rate jumps to 16%, and at 0%, it drops to 1%.

Second is the adaptive mechanism, which adjusts the curve over time based on utilization trends. If utilization is persistently too high or too low, the model shifts the curve upward or downward, creating incentives to balance borrowing and lending. This dynamic structure allows the AdaptiveCurveIRM to adjust market conditions and asset types without external intervention. [6]

Public Allocator

The Public Allocator is a designed to address the challenge of fragmented liquidity isolated lending markets. In , each market is isolated to contain risk, but this can lead to inefficiencies when liquidity is spread thin multiple pools. The Public Allocator enables borrowers to access larger amounts of capital by reallocating liquidity from one market to another on demand. Instead of requiring borrowers to split their transactions several markets, the allocator automatically sources the needed liquidity and makes it available in a single borrowing operation.

This mechanism enhances user experience by providing deep liquidity through a seamless process that’s invisible to the borrower. It also benefits the broader ecosystem by creating liquidity network effects, making markets more efficient without sacrificing isolation security. Vault curators retain control over the allocator’s behavior by defining caps, preferred market routes, and optional fee structures. This ensures that while liquidity becomes more mobile and accessible, the underlying risk controls remain in place. The Public Allocator thus merges the safety of isolated lending markets with the convenience of pooled borrowing, improving efficiency without compromising decentralization or risk management. [7]

Bundlers

In the ecosystem, Bundlers are that group multiple operations—such as lending, borrowing, or swapping—into a single transaction. This structure simplifies user workflows by removing the need to manually execute and confirm each step individually, reducing friction and costs.

There are currently two versions of bundlers: Bundler2 and Bundler3. Bundler3 is the most advanced version, directly integrated into the interface. It enables users to perform complex actions in a single click, streamlining operations. With Bundler3, users can perform multi-step processes efficiently, avoid unnecessary expenditures by paying for just one transaction, and ensure atomicity. If any part of the transaction fails, the entire operation reverts. This bundling capability improves the user experience and minimizes cost and risk when interacting with the protocol. [8]

MORPHO

is the for the Protocol, granting holders voting rights within the . Governance decisions are made using a weighted voting system, where influence is based on the amount of held or delegated. Participants can vote on proposed changes or upgrades to the protocol.

The original token, now considered legacy, was deployed without support for on-chain vote tracking. To address this, the community approved creating a wrapped version in MIP-75. Wrapped enables on-chain governance functionality and is designed to support future cross-chain interoperability. Legacy tokens can still be converted 1:1 into wrapped using a wrapper contract on the App. However, only wrapped is transferable, reducing the risk of confusion or misuse in external integrations. [9]

Tokenomics

has a total supply of 1B tokens and has the following distribution: [9]

  • Morpho DAO: 35.4%
  • Strategic Partners: 27.5%
  • Founders: 15.2%
  • Morpho Association: 6.3%
  • Contributor Reserve: 5.8%
  • Users & Launch Pool: 4.9%
  • Early Contributors: 4.9%

The circulating supply on transferability date was approximately 11.2%. [9]

Partnerships

REFERENCES

[1]
docs.morpho.org

Morpho Overview – Morpho Docs

Jun 27, 2025

[2]
docs.morpho.org

Morpho DAO Governance – Morpho Docs

Jun 27, 2025

[3]
docs.morpho.org

Morpho Market – Morpho Docs

Jun 27, 2025

[4]
docs.morpho.org

Morpho Vaults – Morpho Docs

Jun 27, 2025

[5]
docs.morpho.org

Curator – Morpho Docs

Jun 27, 2025

[6]
docs.morpho.org

Interest Rate Model – Morpho Docs

Jun 27, 2025

[7]
docs.morpho.org

Public Allocator – Morpho Docs

Jun 27, 2025

[8]
docs.morpho.org

Morpho Bundlers – Morpho Docs

Jun 27, 2025

[9]
docs.morpho.org

The MORPHO token – Morpho Docs

Jun 27, 2025

HomeCategoriesRankEventsGlossary