Morpho

Morpho Rates - Loan Rates and Interest Rates

Morpho

Utilization rate curves

Morpho loan rates and Morpho interest rates are market-driven. In Morpho Blue, each market has a utilization-based interest-rate curve. When utilization is high, both the supply rate and the borrow rate rise, which attracts more suppliers and cools borrowing. When utilization is low, rates fall. The curve is per market, so each asset pair clears at its own equilibrium.

For a borrower, the Morpho loan rate is the cost of drawing liquidity in the specific market they borrow from. It is not a protocol-wide average and not a posted APR from a committee. For a supplier, the Morpho interest rate is what borrowers in that market are paying, after the market's parameters. The MORPHO token and incentives can steer where liquidity flows. The base rate is still supply and demand.

That is also how to compare two Morpho earn positions. A vault's displayed rate is a blend of the markets it allocates to. A direct deposit shows one curve. If you want the highest rate, you are choosing the fullest market, and you are also choosing that market's collateral. Rate and risk are the same screen.

How to read a Morpho rate

  1. Find the market. Rates do not exist at the protocol level. They exist on a market.
  2. Check utilization. Borrowed liquidity divided by supplied liquidity is the input to the curve.
  3. Separate supply and borrow. Morpho interest rates are what suppliers earn. Morpho loan rates are what borrowers pay.
  4. If you are in a vault, open the allocation. The vault rate is the mix, not a new curve.

Frequently asked questions

How are Morpho loan rates set?

Each Morpho Blue market uses a utilization curve. High utilization raises the borrow rate. Low utilization lowers it. The rate is the clearing price of that market.

Why is the supply rate different from the borrow rate?

Borrowers pay the Morpho loan rate. Suppliers earn the Morpho interest rate on the liquidity that is actually in use. A market that is mostly empty pays suppliers very little, because little of their capital is lent out.

Do vaults set their own rates?

No. Morpho vaults allocate across markets. The rates come from those markets. The curator changes the mix, which changes the blended Morpho earn yield.