You can deposit crypto assets in a Morpho Vault V2 on the Morpho interface.
A Morpho Vault V2 is an enhanced product that allows you to deposit one asset and earn passive yield.
Your deposits are actively curated by a curator who allocates your funds to underlying Morpho protocols providing yield. However, Morpho Vault V2 introduces powerful new features that make it more flexible, secure, and future-proof.
Morpho Vault V2 brings Universal Yield Access
Morpho Vault V2 uses a flexible adapter system that allows it to tap into multiple yield sources across Morpho. This means a Morpho Vault V2 can allocate to any version of the Morpho protocols:
Morpho Variable Rate Markets (Morpho Blue)
Future Morpho protocols (like Fixed Rate Markets - Morpho Midnight)
This makes Morpho Vault V2 "future-proof". As new Morpho products launch, Morpho Vaults V2 can access them without needing upgrades or migrations.
Morpho Vaults V2 also offer enhanced safety features, better risk management and is compliance ready. More on this new features in the documentation here.
Morpho Vaults V2 on the Morpho app
You can use the explore page and navigate through Morpho Vaults V2 in the Morpho Vaults page:
Morpho Vault V2 yield (APY)
The APY of a Morpho Vault V2 changes over time. It depends on where the vault allocates, the vault’s fees, any rewards, and the vault’s max APY.
Reading the APY breakdown
Hover a vault’s Net APY to see where the yield comes from. An icon next to the Net APY tells you there is more to see:
A Sparkle - The vault has rewards, donations or a surplus boost.
An arrow pointing up to a line - The vault’s APY is capped at its max APY.
The vault’s curator team can set a max APY for the vault. Native APY and Donations (or Surplus boost) combined can’t exceed this max APY. Rewards are paid separately and aren’t capped.
Yield above the cap isn’t lost. It stays in the vault and is paid out to depositors over time, never faster than the max APY.
Interest paused
If the max APY is set to 0%, the vault shows “Interest paused and a warning triangle. The Curator set this Vault’s max APY to 0%.” Deposits earn no interest until the max APY is raised. A paused vault can still record losses.
A vault can show more than one icon. If no icon is shown, the vault has none of the above and its Net APY is its Native APY.
The breakdown lists the following rows. They add up to the Net APY.
Row | What it is |
Native APY | Yield from the vault’s allocations, after the vault’s fees. |
Donations | Extra yield from assets donated to the vault, after the vault’s fees. Shown only for vaults known to receive donations. |
Surplus boost | Extra yield from assets the vault holds above what it has already paid out, after the vault’s fees. This can come from donations, from yield earned above the max APY, or from other gains. Shown instead of “Donations” when the source isn’t known. |
Rewards | Rewards tokens, one row per token. See Rewards on the Morpho App. |
Net APY | The total of the rows above. |
The app doesn’t show how large a donation is or how long it will keep boosting the APY.
Choosing a Morpho Vault V2
When selecting a Morpho Vault V2, consider these factors:
Curator reputation: Who curates the vault? What's their track record and expertise?
Allocation strategy: Where does the vault allocate? Which markets does it allocate to?
Risk profile: What types of markets and collateral does it expose you to?
Fee structure: What are the performance and management fees?
Current and historical APY: How has the vault performed over time?
Security setup: Are timelocks properly configured? Is there an active Sentinel?
More on curators and how to assess them in this blog article.
Morpho Vault V2 Liquidity
Your deposits are not idle: the curator allocates them to underlying markets to earn yield.
Withdrawals are paid from the vault's idle liquidity and from its liquidity market, which is a highly liquid market the curator picks as the main source for withdrawals.
When needed, the Morpho app also pulls liquidity back from other markets for you. This shows up as "Deallocatable liquidity" in the vault's Liquidity tooltip.
On rare occasions, you may not be able to withdraw your full balance right away. This usually comes from temporary market conditions, not bad debt. If regular withdrawals aren't possible, in-kind redemption lets you move your position into the underlying markets (you may pay a small penalty), so you always have a way out. More about in-kind redemption in this article.
To learn why liquidity can be limited, how to read a vault's liquidity in the Morpho app, and what you can do, read Morpho Vaults and available liquidity.
Morpho Vault V2 Risks
Morpho Vault V2 carries some risk listed below:
Bad debt risk: in underlying markets, if collateral values fall below borrowed amounts before liquidation it can generate bad debt, losses are shared proportionally among depositors.
Liquidity risk: While in-kind redemptions provide an exit, all liquidity may temporarily be borrowed, requiring you to wait or use forced deallocation.
Morpho Vault V2 governance risk: The Owner, Curator, Allocator, and Sentinel roles have significant power. Always research who holds these roles and how they're secured (ideally through multisigs and timelocks).
Adapter risk: Since Morpho Vault V2 can allocate to multiple protocols through adapters, you're exposed to the risks of each protocol where funds are deployed.
Gate risk: If a Morpho Vault V2 implements access gates, certain restrictions may affect your ability to deposit, withdraw, or transfer vault receipt token.
Important: Morpho Vault V2's timelocks provide crucial protection. Most risky actions require a waiting period, giving you time to react and withdraw if you disagree with proposed changes. Pay attention to timelock durations when choosing a Morpho Vault V2.
Pending changes are featured on each Morpho Vaults' page.
You can read more about Morpho Vaults V2 in the documentation here.