Morpho
Last updated
Last updated
The integration of Morpho vaults and markets into Oku marks a major milestone in delivering a seamless and powerful DeFi experience. By combining DeFi meta-aggregation with Morpho’s robust lending and borrowing infrastructure, users can now access frictionless money markets directly on Oku.
Morpho is a decentralized lending protocol that enables over-collateralized borrowing and lending of crypto assets across EVM-compatible networks. It acts as a trustless, composable layer for DeFi lending where users can deposit assets to earn passive yield or borrow against collateralized positions. Built for transparency, efficiency, and modularity, Morpho allows for both ease of use and flexibility for advanced strategies.
Lending in Morpho involves:
Collateralization: Users provide collateral to borrow other assets
Risk Management: Liquidation mechanisms protect the protocol through loan-to-value ratios
Interest Accrual: Dynamic interest rates based on market conditions
Open Participation: Anyone can lend or borrow through the protocol
Non-custodial Design: Users maintain ownership of their assets at all times
Let’s begin by explaining the difference between Vaults and Markets
Morpho Vaults are yield-generating accounts that allow users to deposit a single token to be managed by a curator. The curator of the vault allocates capital across various Morpho markets in accordance with pre-set risk strategies to generate sustainable yield for the depositor. At any time, users retain full control over their assets and can withdraw their liquidity at their discretion.
Vaults are:
Simplistic – Users don’t need to micromanage capital allocation.
Flexible – Assets can be withdrawn at any time.
Curated – Managed by experienced curators to optimize yield and risk.
Morpho Markets are isolated lending pools that pair one collateral asset with one loan asset.
Each market is:
Immutable – Parameters like LLTV are fixed at creation.
Isolated – Risk is limited to the specific market.
Transparent – Clear conditions for lending and borrowing
Simple – One collateral asset, one loan asset per market
Example: An ETH/USDC market allows users to borrow USDC by providing ETH as collateral, under specific risk conditions.
LLTV defines the maximum borrowing capacity in a market. For instance, if a market has an LLTV of 80%, a user can borrow up to $80 for every $100 in collateral. If the value of their collateral drops or their debt rises beyond this ratio, the position is at risk of liquidation.
Liquidation in DeFi refers to the process whereby a user's collateral is sold off to cover a loan when the value of that collateral falls below a certain threshold. If the loan value declines below the LLTV, the user's collateral will be liquidated to protect lenders and allow them to withdraw their initial contribution of capital. A position becomes liquidatable when:
Collateral value decreases
Debt increases due to accrued interest
A combination of both factors
Example: If a borrower provides $100 of collateral in a market with an LLTV of 80%:
The position is safe when the borrowed value is <= $80
The position becomes liquidatable when the borrowed value > $80
An LLTV of 80% provides lenders with an amount of wiggle room (20%) between the point of liquidation and where their collateral would depreciate in value
In the event when a position becomes liquidatable, an external third party - a liquidator - can repay part or all of the borrower’s debt in exchange for an equivalent amount of collateral plus a liquidation bonus.
Curators are individuals or entities that manage vault strategies and optimize risk-adjusted returns for depositors. They decide which markets a vault allocates to and adjust parameters to maximize yield while maintaining safety.
Market Selection & Management: Evaluate and select appropriate markets based on risk-reward profiles, actively manages caps and maintains market health
Rate Optimization: Balance lending and borrowing rates to maintain competitive yields for depositors while attracting borrowers
Liquidity Allocation: Strategic distribution of vault capital across markets
Risk Monitoring: Assess collateral quality, oracle reliability, liquidation feasibility and on-chain liquidity to protect against bad debt events
Communication: Provide transparency around strategy and risk parameters
Curator's typically assign a performance fee to capture a portion of the yield generated by the vault. This fee is not charged on user's deposits or rewards, but collected on the interest from the vault
Reward campaigns utilizing Morpho's infrastructure operate differently to Merkl and have a different schedule to claim rewards.
Rewards Distribution Schedule
Snapshot Timing: Every Thursday evening (PST), a snapshot is taken to record each user’s vault position and rewards balance.
Timelock Period: After the snapshot, a 3-day timelock begins. During this period, the rewards are finalized.
Claimable Rewards: Finalized rewards become claimable every Monday.
Note: If a user creates a new vault position or add tokens to an existing one after the Thursday snapshot, the rewards from those changes will not be included in the upcoming Monday's distribution. Instead, they’ll become claimable on the second Monday after the snapshot.
Scenarios:
User deposits 0.75 BTCN into the Smokehouse BTCN vault on Corn on Wednesday, May 28.
User will be able to claim rewards on Monday, June 2
User deposits 0.75 BTCN into the Smokehouse BTCN vault on Corn on Friday, May 30.
User will be able to claim rewards on Monday, June 9.
All reward campaigns whether using Merkl or Morpho's infrastructure are claimable on Oku
For a detailed breakdown of liquidation mechanics with calculations and examples, please visit
You can claim rewards directly on Oku through the Rewards tab near the bottom of the page. Depending on the chain, reward campaigns can either be setup using Morpho's infrastructure or through . Regardless of what system is in use, users can claim rewards directly on Oku.
All yield opportunities using Merkl as a rewards distribution system are listed on . Rewards using Merkl occur at a frequency dependent on the chain, though on average are distributed approximately every 9 hours. Here's a to a useful dashboard that tracks updates of user-based rewards across all chains with active campaigns.
