Morpho introduces a peer-to-peer lending order book in the Ethereum and EVM ecosystem, with its core advantages being risk isolation and refined liquidation logic:
Position-level isolation: Each P2P match forms an independent position, and the health threshold (LTV, Liquidation Threshold) is jointly determined by the borrower's collateral and the lender's risk preference, with systemic contagion being nearly zero;
On-chain oracle redundancy: Integration of Chainlink and Pyth dual price feeds, combined with TWAP anti-manipulation, triggering a delay for single liquidation <1 block;
Liquidation incentive game: Liquidators can capture liquidation bonuses ranging from 8% to 12%, with the incentive pool dynamically supplemented by the protocol's reserves, improving liquidation efficiency by 40% compared to Aave v3;
Socialization of non-performing debt minimization: unmatched liquidity automatically recycles Compound/Aave, with a historical bad debt rate peak of only 0.03%.
As of now, Morpho Blue has supported 27 types of collateral combinations, with a total of 200 liquidation events and a recovery rate of 99.7%. For constructing portfolio management, structured products, or hedge fund-level strategies, the deterministic risk parameters and combinability provided by Morpho are becoming the new benchmark for DeFi risk engines.
