Moonwell MetaMorpho Vaults are an innovative solution made possible through a collaboration between the Moonwell and Morpho DAOs, Block Analitica and B.Protocol. These vaults combine the strengths of isolated lending markets and lending vaults, offering users a streamlined, efficient, and secure method for lending their digital assets.

1. What Are Moonwell MetaMorpho Vaults?

Moonwell MetaMorpho Vaults are built on Morpho Blue, a next-generation lending protocol focused on capital efficiency, flexibility, and security. These vaults accept single asset deposits and dynamically allocate funds across various Morpho Blue lending markets based on predefined risk parameters and optimization strategies set by the vault curators — Block Analitica and B.Protocol.

2. Key Benefits

2.1 Simplified User Experience

  • Users can deposit into a single vault for each supported asset, eliminating the need to manage multiple positions.

2.2 Optimized Capital Efficiency

  • Vaults dynamically allocate funds across lending markets to maximize returns while managing risk.

2.3 Transparency and Security

  • All vault logic is immutable and executed onchain, providing full transparency and enhanced security.

2.4 Flexibility

  • The use of isolated markets make it possible to support a wide range of assets that would otherwise be too risky.

2.5 Robust Risk Management

  • A multi-layered governance structure that provides comprehensive oversight.

3. Technology Behind the Vaults

3.1 Morpho Blue

  • Moonwell MetaMorpho Vaults are built on Morpho Blue, a next-generation lending protocol designed for capital efficiency, flexibility, and security.

  • Morpho Blue's codebase is compact (under 650 lines of Solidity) and immutable, reducing potential attack surfaces.

  • To learn more about Morpho Blue, visit their documentation.

  • For more information of the risks involved with using Morpho Blue and its MetaMorpho protocol, please refer to the Morpho Risk Documentation (1) (2).

3.2 ERC-4626 Compliance

  • The vaults adhere to the ERC-4626 standard, which provides a standardized interface for tokenized yield-bearing vaults.

  • This compliance ensures interoperability with other DeFi protocols and applications.

4. How Moonwell MetaMorpho Vaults Work

4.1 Deposit Process

  • Users deposit a supported asset into the corresponding vault.

  • The vault mints shares in return of the deposited asset, representing the user's proportional ownership of the vault's total assets.

4.2 Yield Generation

  • Deposited assets are dynamically allocated across Morpho Blue lending markets.

  • Yield is generated through borrower fees that accrue continuously on a block-by-block basis.

  • Fees earned from borrowers are auto-compounded back into your position and shared proportionally among all vault depositors.

  • Additional incentives may also be earned by vault depositors. Any incentives that are available are managed by the Morpho DAO and are typically distributed at the end of every epoch.

4.3 Withdrawal Process

  1. Users can burn their share tokens to withdraw the underlying asset.

  2. The withdrawal amount reflects the user's proportion of the total vault assets, including any accrued yields.

5. Vault Structure and Governance

Moonwell MetaMorpho Vaults employ a robust role-based system for risk management:

  • Owner (Moonwell DAO): Sets high-level vault strategy and assigns roles

  • Curator (Block Analitica and B.Protocol): Defines vault parameters (markets, supply caps, borrow caps)

  • Allocator (Block Analitica and B.Protocol): Dynamically optimizes allocations within set parameters

  • Guardian (Moonwell Security Council): Provides oversight and can veto actions within a specified timelock period

6. Getting Started

To start using Moonwell MetaMorpho Vaults:

Interacting with MetaMorpho Vaults

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