# Morpho review

*Exploring the Future of Lending and Borrowing *

By [The Kalen Algo](https://paragraph.com/@kalen) · 2025-10-31

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Morpho protocol
===============

### What is Morpho?

It is a dapp built on EVM (Ethereum Virtual Machine) that allows anyone to borrow crypto assets and supports overcollateralized lending.  
  
There are three services they provided

### **Market V1: A traditional pool where one Collateral is tied to one loan asset.**

![](https://storage.googleapis.com/papyrus_images/8035aaa35d1f5ad4823bfb396dead3b0dca0455b7254dfc1d229946208c0dfe8.png)

Example of what type of pools you can enter

###   
**Vault V1: You deposit your assets like a bank and earn yield from people borrowing with interest. But you can only use Morpho markets**

###   
**Vault V2:** The same as Vault V1, except now you can connect to any protocols with debt automatically tracked, and can separate the roles and permissions with the benefit of yield from different sources

![](https://storage.googleapis.com/papyrus_images/20e348930357591d1c737f06572bbc55c5ee33fd78c7912388002b996f13d6e0.png)

Example of what type of vaults you can enter

  

### Risks with Morpho

As with every dapp, there are several risks associated with it.  
  
First, there is **Oracle Risk.** No oracle is immune to price manipulation, so when it comes to picking one. Choose the one with the most users and that is credible.  
  
Second, you need to consider the **risk with your other party**. This could be the asset they chose to use as collateral, and if the list of assets they included.  
  
Lastly, while Morpho does do auditing with some of the best security in the industry. There's always a chance of an exploitation  
  
For more information regarding risks, be sure to check out the documentation, which you can find here

[

Risk & Security Documentation
-----------------------------

By using Morpho or Morpho Vaults, you assume the risks associated. The following section provides an overview of different types of risks you should be aware of when using Morpho and Morpho Vaults. This overview is not exhaustive and may not cover all potential risks to which you might be exposed.

https://docs.morpho.org

![](https://storage.googleapis.com/papyrus_images/ecbce1fa1ea21525806df7630d8ee3645656b8ce21fe63c12af570c9c593c3e1.png)

](https://docs.morpho.org/learn/resources/risks/)

###   
Fees

Morpho makes money by including different fee types, depending on which service you choose  

**Vaults 1:**  
There is only a single performance fee, which is calculated by the yield of the vault. It fluctuates based on how it is performing and is capped at 50%

**Valuts 2:**

There is a performance fee, but also a management fee. The difference is that it is calculated based on the annualized value of the total assets in the vault. It is capped at 5% per year

  

### Rewards

You earn based on two things: borrowing from the market or supplying assets to it.  
  
Aside from the yield, Morpho distributes its token to users every 8 hours, which acts as a governance token.  
  
You can even receive other types of tokens and rewards based on the vault curators and market creators  
  
Learn more about claiming here  
[https://docs.morpho.org/learn/concepts/rewards/](https://morpho)  

### Final Review

It is easy to use in terms of UX and get your door into deFi

It's incredibly transparent on how much you'll earn, how much the platform takes, and the risk associated. So you know exactly if it is worth it or not

  
Compared to competitors in terms of rewards, it is the most stable, with being sideways between a $1-2$, so you know you'll be rewarded properly  
  
I would say it is worth checking out for something **reliable and safe**, but if you have a higher risk tolerance and want something more speculative, then there are other protocols for you

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*Originally published on [The Kalen Algo](https://paragraph.com/@kalen/morpho-review)*