> ## Documentation Index
> Fetch the complete documentation index at: https://docs.rosetta.sh/llms.txt
> Use this file to discover all available pages before exploring further.

# Lending Markets

Rosetta routes capital to lending markets across two protocols: **Morpho** and **Aave**. Each protocol has a different market architecture.

## 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                  |

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**Utilization**

Utilization is the ratio of borrowed assets to total supplied assets:

`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                  |

**How Aave Differs from Morpho**

| 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 |

The Yield Router evaluates Aave supply APY alongside Morpho vault APY when making allocation decisions.