What is the difference between Morpho and AAVE, Compound? In simple terms, explain the new generation of Decentralized Finance architecture.

(KOL's promotion of Decentralized Finance is explosive! The $8 billion potential crisis in DeFi is just the tip of the iceberg. The article mentions: “The reason traditional DeFi protocols are relatively safe is that they maximize the exclusion of human variables. However, the Curator model of DeFi protocols brings back the greatest and most unpredictable risk—human beings—into the Blockchain. When trust replaces code, and transparency turns into a black box, the cornerstone of DeFi security has collapsed.”

But is it really like this? What differences exist between Morpho and protocols like AAVE and Compound? Curator ) manager can be imagined as what role the fund manager ( plays in Morpho?

Morpho Market: The purest lending market

To discuss the differences between Morpho and AAVE, Compound, we need to start by understanding its structure. The underlying layer of Morpho is Market ). Click on Borrow( from the homepage; Market is the purest borrowing and lending trading pair. For example: pledge wBTC and borrow USDT.

This is the purest and most intuitive lending market. It is also the most fundamental and versatile infrastructure of DeFi building blocks.

The curator is responsible for finding sources of income from the market and managing funds.

Next, let's talk about the key points of this incident. Vault ) is accessed by clicking Earn( from the homepage. The Vault is actually managed by a Curator ) who is responsible for allocating which Markets to invest in and fulfilling management duties.

Decentralized Finance developer Anton Cheng gave an example: a USDC-DOGE-lltv-90% market means that by depositing DOGE, you can borrow 90% of the value in USDC. If today you feel that the risk of DOGE has increased, you need to transfer your USDC to a new lltv-80% market.

This is obviously not something that an average person would be willing to do, which is why there is the vault aggregator, using two risk management assistants, the curator and the allocator, to help depositors move their positions around. This is Morpho Vault.

New Generation DeFi Basics ( Hyperstructure ) Paradigm: Lending Protocol Morpho

Simeon from K7 Capital also shared their responsibilities as a Curator:

Identify high-quality assets and create economically meaningful markets, rather than merely chasing profits through meaningless circular lending strategies.

Set parameters that reflect the actual liquidity and market conditions, and adjust them according to changes in these conditions.

Take proactive measures to avoid bad debts when necessary, just like we did in the case of Elixir.

We will also inject liquidity in the early stages and try to keep the loan book (loanbook) at a healthy level, which is something other projects usually do not do.

The lending protocol where the code is law, and the parties to the agreement are the managers themselves.

The crux of the original text points out that managers use higher APY asset management strategies to boost TVL, much like Stream and Elixir. The original text highlights this incentive mechanism of “internalizing profits and externalizing risks” is almost tailor-made for moral hazard. As criticized by Arthur, the founder of DeFiance Capital, in this model, the mindset of the Curators is: “If I mess up, it's your money. If I get it right, it's my money.”

But is the lending protocol that touts “Code is Law” really that naive? Anton Cheng pointed out the key issue: in fact, both AAVE and Compound have managers, with the difference being that AAVE's DAO serves as its own curator. Compound's curator is also Gauntlet (Morpho, which has the most Vaults as curators ). He believes that the so-called new version of lending is actually no different from the old version.

DeFi developer Kevin Lin stated: Essentially, Morpho Curator is at least more user-friendly, because compared to AAVE, users can at least choose a curator. After all, trust starts from somewhere. For Morpho, it's just an additional curator intermediary, allowing them to act as a broker receiving management fees, and the competition among channels is also beneficial for users. Morpho, as a protocol, focuses on providing Lending as a Service, while intermediaries can relieve the burden of contract development.

As for the original text saying that users only need to deposit USDC, apart from vague strategy descriptions and historical returns, users know nothing. In fact, taking Steakhouse Finance's USDC Vault as an example, it clearly records the exposed Market and its proportion.

Kevin Lin also stated: Morpho should be a risk-isolated lending protocol, and the dangerous part is some programs where you just leave it and automatically earn, because if you don't know where the routing goes, it's hard to know the underlying collateral liquidity and the risks of the smart contract itself. He reminded that the convenience of abstracted yields in DeFi sometimes comes with significant risks.

Morpho Curator Refutation of the Original Text: Outsiders Evaluating Insiders

Taresky mentioned: Some friends might know that I have a side job as a Morpho Curator (similar to a fund manager role).

The job content generally includes:

Research stablecoin projects

Proof of underlying assets

Calculate Liquidity

Set market maker permissions

and prepare the liquidation robot

This has always been the main job of arbitrageurs, so this side job is actually very suitable for us. Here is what I understand about the situation:

The curator is currently legally not liable.

The Curator is responsible for determining strategies, directly affecting the security of the vault.

There is a possibility that the curator's authority may collude with the project party for mutual benefit.

Not just one stablecoin project has privately sought us out, hoping that we provide liquidity.

All markets are actively chosen by us, and there has never been any collusion of interests. We have not provided funding to ( projects that I believe are unreliable, and we will not do so in the future.

If one day the projects or the market we invested in encounter issues, we will try to detect them in advance; if we cannot detect them, we will withdraw as quickly as possible. If we are unable to withdraw in time, we will fight for our rights together. If the fight for rights fails, we will bear the losses together.

The virtuous model is: manage risks, allocate funds, earn dividends.

The malicious model is: partners deceive users, and finally sell the users as “hot potato players.”

Now, some institutions have been caught selling out their users. The worse situation is that these institutions are encouraged by the market and platforms for selling out users. If the situation develops to this point, this whole model has been completely falsified for me personally. After all, if the goal is just to make money, why complicate things so much? Wouldn't it be enough to just create a stablecoin project?

What are the differences between Morpho and AAVE, Compound in this article? In simple terms, the new generation of DeFi architecture first appeared in Chain News ABMedia.