What is Morpho Market (V1)?

Morpho Market V1 was the first version of Morpho’s lending system, built to make borrowing and lending more open, secure, and predictable on-chain. It introduced a new way to create isolated and immutable lending pools — meaning each pool had its own rules, risks, and assets.

Each Morpho Market V1 paired:

▪︎ 1 Collateral Asset 🪙

▪︎ 1 Loan Asset 💰

This simple structure made lending more transparent and reduced protocol-wide risk.

■ Key Features

✅ Simple Design – One collateral + one loan asset per market.

✅ Immutable Rules – Once created, no one can change the parameters.

✅ Isolated Risk – Each market is independent, keeping risks separate.

✅ Permissionless Creation – Anyone can create a market without governance approval.

✅ Transparent Conditions – All lending and borrowing rules are clear on-chain.

■ The Five Core Parameters

1. Collateral Asset – ERC20 token used as collateral.

2. Loan Asset – ERC20 token used for borrowing (not ERC4626).

3. LLTV (Liquidation Loan-To-Value) – Max borrow limit before liquidation.

Example: LLTV 80% → If your collateral is worth $100, you can borrow up to $80.

4. Oracle – Smart contract that sets price between collateral and loan assets.

5. IRM (Interest Rate Model) – Defines how borrower interest rates are calculated.

■ Permissionless Market Creation

Unlike traditional DeFi lending platforms that need governance votes to list assets or change parameters, Morpho V1 allowed anyone to create markets freely.

Each market had its own fixed set of parameters.

Once deployed, the market remained immutable and permanent.

LLTV and IRM could only be chosen from Morpho-approved options during creation.

This design marked a big shift — from centralized governance to open, community-driven innovation.

■ Core Interactions

Supply: Lenders deposit loan assets to earn interest.

Borrow: Borrowers lock collateral and borrow loan assets within LLTV limits.

Withdraw: Lenders can withdraw anytime if liquidity allows.

Repay: Borrowers repay loans to unlock their collateral.

Liquidate: When a borrower exceeds LLTV, anyone can repay part of their debt and get collateral at a discount.

@Morpho Labs 🦋 $MORPHO #Morpho