Morpho is an over collateralized lending and borrowing protocol.
To borrow assets, you need to deposit more collateral than what you want to borrow.
You can use the Morpho markets page, you will have to choose the market that suits your need.
What can I borrow?
Morpho allows permissionless market creation with any ERC20 token as collateral and loan asset. You can borrow any ERC20 provided a market has been created and there is available liquidity.
How much can I borrow?
Each Morpho market has a specific and fixed LLTV (Liquidation Loan To Value) parameters. It is minimum value of collateral required relative to the borrowed assets. For example, if this ratio is 90%, the value of borrowed assets must not exceed 90% of the value of the collateral, or the position is eligible for liquidation.
The amount you can borrow is therefore directly linked to the value of your collateral and the LLTV of the market.
How can I Borrow?
Once your market chosen, head over the market page, supply collateral and borrow. Make sure to choose a LTV you are confortable with.
What is the cost of borrowing?
On Variable Rate Markets, interest paid by borrowers is determined by the Interest Rate Model (IRM).
All Morpho Variable Rate Markets use the same IRM: the AdaptiveCurveIRM.
This IRM autonomously adjusts, for each market independently, the borrow rate based on the ratio of borrowed assets over supplied assets, commonly known as utilization rate.
You can see on the main Markets page or on a specific market page current and historical Borrow APY.
Borrow rate behavior and utilization thresholds
In Morpho Variable Rate Markets, borrow rates are governed by the AdaptiveCurveIRM logic:
Utilization rate below 90%: Borrow rate decreases when utilization is below 90%. The farther utilization is from the 90% threshold, the faster the rate decreases.
Utilization rate above 90%: Borrow rate increases when utilization exceeds 90%. The higher the utilization above this threshold, the faster the rate increases.
Utilization rate at 90%: Borrow rate is steady.
What are the risks involved when borrowing?
Along with general risks associated with Morpho, using Borrow has specific risks including:
Liquidation risk: Each Variable Rate Market has a fixed Liquidation Loan-to-Value (LLTV) limit. If your position’s Loan To Value (LTV) goes beyond this limit, your position becomes unhealthy and it could be liquidated. When borrowing on Morpho, it’s important to choose the right market and regularly monitor your position to avoid liquidation. Learn more about liquidations here.
Oracle risk: Each Variable Rate Market uses an oracle to track prices, set when the market is created. However, some oracles may be susceptible to price manipulation, which can cause liquidations or bad debt. (More on oracles and how to assess it here). When evaluating an oracle, consider its security, reliability, and how often it updates prices, especially if it’s centralized.
Read more about the risks here.
How do I repay borrowed assets?
On the Morpho app (app.morpho.org) you can repay fully or partially borrowed assets at any time provided you have the required asset in your wallet.
Does my collateral earn interest?
By default, collateral assets on Morpho are not rehypothecated and do not earn a Supply APY as they are not lent out to borrowers. This alleviates the liquidity constraints for liquidations faced by other lending platforms and allows Morpho to offer higher capital utilization.
You can read more about variable Rate Markets in the documentation here.