Idle + Morpho: New Yield Tranches On MetaMorpho Vaults Are Coming
We’re thrilled to share that we’re partnering up with Morpho to build resilient risk diversification on top of MetaMorpho’s expertly-curated pools
In February 2023, Idle introduced Yield Tranches built on top of Morpho’s peer-to-peer layer on Aave (DAI, USDC, USDT, and WETH markets), then added as yield sources for Junior Best Yield vaults.
As Morpho embarks on a new chapter with the nascent Morpho Blue ecosystem, we are amped to unveil the next phase of this longstanding collaboration: the rollout of additional Yield Tranches, strategically integrating the upcoming MetaMorpho’s lending vaults.
Upon the official launch of Morpho’s novel lending protocol, the strategies will be accessible through our dashboard, providing Idle users with risk-adjusted yields driven by heightened efficiency and flexibility. The initial offerings will tap into Meta Morpho’s vaults from Block Analitica and B.Protocol (WETH), as well as Steakhouse Financial (USDC). Here’s a comprehensive preview of the exciting developments that lie ahead.
Morpho Blue & MetaMorpho: Evolving The Decentralized Lending Space
Morpho’s debut version, Morpho Optimizer, functions atop Compound and Aave, advancing their interest rate model through the introduction of an extra layer of peer-to-peer liquidity matching system across their markets. While this mechanism fosters improved capital efficiency and offers favorable rates for both borrowers and lenders, its growth potential is highly dependent upon the existing design of the underlying lending pools.
Enter Morpho Blue: a new, trustless lending primitive that reimagines the current decentralized lending space through permissionless market creation, achieving maximized efficiency and flexibility.
Empowering the establishment of isolated lending markets for any asset, Morpho Blue requires specifications for one loan asset, one collateral asset, a liquidation LTV, and an oracle.
As its launch approaches, the protocol is designed to function as a fundamental DeFi building block, allowing for the seamless addition of logic layers to enhance functionality.
The first of these layers is MetaMorpho: an open-source protocol designed to create versatile lending experiences, featuring optimized rates and transparent curation of risks. Seamlessly operating on top of Morpho Blue, it streamlines access to advanced risk management features for users, MetaMorpho vaults simplify the user experience by enabling passive lenders to delegate risk curation to experts curating the vaults, akin to practices on Aave or Compound.
Meta Morpho Yield Tranches: A New Paradigm For DeFi Risk Management
Each MetaMorpho vault can cater to users with diverse risk profiles by depositing into markets with different collateral assets and different parameters. Built on top of these vaults, Yield Tranches take this step even further, allowing end users to tap into MetaMorpho’s varied offerings while choosing between the extra protection on funds granted by the Senior class, or the amplified yields provided by the Junior counterparty. All with the additional benefit of automatically compounded rewards.
Upon launch, Idle will release Yield Tranches based on MetaMorpho’s vaults from Block Analitica and B.Protocol (WETH), as well as Steakhouse Financial (USDC):
- Leveraging top-tier expertise from Block Analitica and B.Protocol in risk management and infrastructure, the WETH vault will commence by providing deposits to wstETH collateral markets. Subsequently, it will explore opportunities in stablecoin and other LST collateral markets.
- In the USDC vault managed by Steakhouse, initial lending will be against permissioned tokenized short-term US treasuries (bIB01), issued to users KYC’d by Backed Finance. As new markets emerge on Morpho Blue, the vault will progressively expand exposure to additional RWA collateral.
After the successful launch of Yield Tranches based on Lido and Instadapp, the Idle dashboard is poised to broaden its offerings in the LSD solutions with the introduction of new WETH YTs. Simultaneously, the upcoming USDC YTs will add to Clearpool’s institutional credit markets, continuing our mission to accelerate the on-chain transition of real-world applications.
The overall product suite is on the verge of being enriched with additional sophisticated strategies, empowering liquidity providers to build personalized yield portfolios by seamlessly merging risk-diversification features with a diverse array of underlying sources.
MetaMorpho Yield Tranches are set to arrive soon, along with the launch of Morpho Blue, promising new avenues and progress in the ever-changing DeFi landscape.
Stay tuned for the official release!
About Idle DAO
Idle DAO is a decentralized organization that builds yield automation infrastructure for DeFi. From brand new protocols to institutional and DAOs, businesses of every size use Idle protocol to optimize capital efficiency and manage their treasuries.
Everyone deserves the best for their idle funds in terms of returns and risks. Over the past four years, Idle has rolled out the features and services, defining and shaping the yield aggregation and risk tranching space. To learn more about Idle’s strategies:
