Morpho Markets
A Morpho lending market is an isolated pool where lenders supply assets and borrowers take loans against collateral. Each market is defined by five parameters:| Parameter | Description |
|---|---|
| Collateral asset | Asset borrowers lock (e.g., HYPE, ETH, BTC) |
| Loan asset | Asset lenders supply and borrowers receive (e.g., USDC, USDT0) |
| LLTV | Liquidation Loan-to-Value, threshold at which positions become liquidatable |
| Oracle | Price feed used to value collateral |
| IRM | Interest Rate Model, determines rates based on utilization |
Utilization = Total Borrowed / Total Supplied
Supply APY = Borrow APY × Utilization × (1 − Fee)
Utilization drives rates. Higher utilization means higher rates. Lower utilization means lower rates.
Liquidity
Available liquidity = Total Supplied - Total Borrowed
This is what can actually be borrowed at any moment. When utilization is high, available liquidity is low.
Price Per Share (PPS)
Lenders receive shares representing their claim on the pool. As interest accrues, total assets grow while shares stay constant. The ratio (assets/shares) increases over time. This is how yield is realized without explicit payments.
Isolation
Markets are isolated. A WHYPE/USDC market and a kHYPE/USDC market share nothing: different collateral, different risk parameters, different utilization. Bad debt in one market does not affect others.
Morpho markets are available on both HyperEVM and Base.
Aave Markets
Aave uses a pooled lending model where multiple assets share a single lending pool. Unlike Morpho’s isolated markets, Aave pools aggregate supply and demand across assets.| Parameter | Description |
|---|---|
| Reserve asset | The asset being supplied and borrowed (e.g., USDT0, USDC) |
| aToken | Interest-bearing token received when supplying (represents your deposit + accrued interest) |
| Variable rate model | Interest rate determined by pool utilization with configurable slope parameters |
| Liquidity index | Cumulative multiplier tracking total interest accrued since pool inception |
| Aspect | Morpho | Aave |
|---|---|---|
| Architecture | Isolated markets per collateral/loan pair | Pooled lending across assets |
| Interest tracking | Price Per Share (PPS) | Liquidity index + aToken balance |
| Rate model | Adaptive Curve IRM (self-adjusting) | Variable rate with configurable slopes |
| Risk isolation | Full — each market independent | Shared pool — oracle risk affects all assets |