Externalized Risk Management

In traditional lending and borrowing protocols, market risk is defined through governance, through which token holders define the market settings. Such an approach limits the scope of risk to that which is acceptable to an isolated group of users, reducing the diversity of listed assets and risk profiles. MORE, which is based on Morpho, bypasses these limitations by rendering risk management permissionless in both markets and vaults, providing for a significantly wider variety of lending and borrowing opportunities.

Permissionless Risk Management​

MORE markets are complex contracts that favor design flexibility across multiple parameters such as collateral types, liquidation loan-to-value (LTV) ratios, oracles, deposit limits and in premium markets, preferrential loan terms. They are primarily intended for use by sophisticated lenders such as hedge funds, trading algorithms, protocols and financial institutions.

MORE vaults enable the user experience of MORE markets to be abstracted away for wider accessibility to passive lenders who may not be able or willing to monitor or adapt to market factors and risk in the same way as a professional lender.

In order to simplify interactions with MORE markets, MORE vaults offers users a streamlined way to provide liquidity and delegate risk management tasks to the vault. This setup automates and decentralizes the decision-making process, providing a more passive experience in comparison to lending protocols like Aave or Compound. Because MORE vault creation does not require governance at the protocol level, vault configuration is left wholly up to individual users, DAOs, institutions, etc.

MORE vaults are managed by curators, who decide allocations of deposited assets to multiple markets on depositors' behalf. For example, a MORE vault may accept deposits for a single asset, USDf. The curator of that vault may select and determine proportional allocations to a MORE market in which the loan asset is USDf and the collateral asset is BTCf as well as a second market in which the loan asset is USDf and the collateral asset is FLOW. In such a scenario, the user is discharged of the obligation of assessing the risks associated with collateral, LLTVs, oracles, IRMs and permium loan terms. The vault, organized by the curator, handles this for them.