After reaching a certain stage, NFT projects often face a similar issue: besides selling pictures, what else can be done? Aside from issuing tokens, what other financial strategies can enhance community participation and asset vitality?
Many projects attempt to introduce lending mechanisms—such as using NFTs as collateral to lend liquidity, or conversely, allowing holders to lend ETH to newcomers to purchase project assets. However, reality is often less than ideal:
Either the threshold is too high, or permissions are too restrictive; either the liquidation mechanism is too rigid, or lending conditions cannot be customized; either a centralized solution is integrated, or there are no management rights after integration.
The Vault model of Morpho provides NFT projects with a brand new solution: building financial logic, completely autonomous operation, adjustable liquidation rules, and native integration of identity attributes.
For instance, you are a project holding 10,000 NFTs, assuming these NFTs are recognized by the market as having long-term value, and community members are willing to hold them long-term.
At this point, you can deploy a Vault with the rules:
Only users holding NFTs can borrow;
Only USDC can be lent, with the borrowing limit set to fluctuate based on rarity;
The longer the holding time, the lower the interest rate;
Liquidation rules are adjusted by governance voting from holders;
wMORPHO rewards are prioritized for participants in lending governance.
You do not need to request centralized platforms to support NFT lending, do not need to apply for access permissions, nor do you need to bind to anyone's custody system.
Directly deploy, directly run, with parameters defined by yourself. This is the autonomy of on-chain finance and the true core capability of Morpho Vault.
Furthermore, you can use Morpho to separate the 'usage rights' of the NFT from 'ownership'. For example, community members may want to rent out their NFTs for others to borrow but do not want to transfer ownership.
You can design a special Vault with the logic that:
The NFT itself is locked by the system as collateral;
Usage rights are mapped into a certain function token in the Vault;
Both parties in the loan sign an on-chain contract, setting repayment time and constraints;
Liquidation is automatically executed based on trigger conditions, and in the event of a borrowing failure, the original NFT is returned to the holder.
This mechanism is practically impossible in other protocols because their ability to abstract 'asset forms' is too weak.
The modular structure of Morpho allows you to freely configure every aspect of assets, identities, roles, permissions, and policy logic.
You can even connect the community badge system of NFTs and DAO voting rights to the Vault's 'loan qualification evaluator', achieving a dynamic identity incentive structure where 'the more behavioral contributions, the stronger the borrowing ability'.
So I believe: Morpho provides NFT projects not just with financial functions, but with the capability to build a financial ecosystem.
You don't have to rely on existing protocols; you can become the protocol; you don't have to wait for external support; you can create your own rules; you are not using borrowing logic; you are writing borrowing logic.
This is a complete release of on-chain native nature and an important stepping stone for NFT projects to transition from image assets to functional assets.@Morpho Labs 🦋 $MORPHO #Morpho
