Random learnings from manually supplying to Morpho Markets Before we start, a quick, relevant intro to Morpho is that anyone can create a lend-borrow pair called a market. They look like wstETH/USDC where you can either deposit wstETH to borrow USDC or supply USDC to earn some yields However, if you hang out around Morpho’s frontend, you’ll realize that you can’t actually lend into the market as a normie. You typically do this via vaults. Vaults look sth like Steakhouse Medium Rare vault or sth. You deposit into these vaults, and the curator, people who control the vaults, will deposit into the relevant markets for you based on their mandate. To get around this, I was using Monarch lend. It is a nice front end that allows you to supply into Morpho markets directly. There are its own risk doing this because you will be mogged by giga brains curators who understand risks and the management of it. Anyway the main point is that this creates some problems: 1) As we have seen, there are curators that do weird, obfuscated things that removes control from the $$$ supplier (you) 2) Vaults, because they have a lot more money, can’t ape into smaller markets even though a pleb like me can. So I miss out on juicy yields. 3) Despite a seemingly small UX/UI design where its easier for the average user to ape into vaults than markets, this means markets mostly have vaults transacting in and out of them and can move rates and liquidity bigly The above 3 problems create some structural issues in Morpho that are interesting and certainly things you want to keep in mind. I learn things best when I FAFO, maybe I’ll get rekt someday, but reading about risks and thinking about yield optimization stuff just doesn’t hit the same if I don’t play around with the markets directly. Whatever. Here are some learnings. Some of them could be wrong and I am happy to read other opinions. Its just some things I have at the back of my mind: 1) Know your counter party. Very large dominant borrowers with low LTV don’t have the incentive to repay quickly especially when the liquidity is cooked. This is even worse when their collateral is shady and they have an incentive to rug the pool by taking USDC out 2) Also, try to observe large suppliers that have been trying to steadily cash out over time (may need to have a dune dashy on this or sth). Generally, you want to make sure there is ample loan token (USDC) that you can freely move in and out of. 3) Understand the capacity of the market as opposed to available liquidity. Available liquidity is an output metric that measures money getting taken out of supply so relying on it to determine liquidity is very flimsy. I think some alpha can be found here if there are interesting ideas. For example, if your suppliers are mostly e.g Gauntlet Prime or sth where they generally find safer yields, I think they move a lot less than Gauntlet Frontier (which finds higher risking yields). 4) Try to supply USDC for hot assets. You want your market to have some mindshare so that it balances its liquidity and utilization out. You may meet liquidity issues with sleepier pools because participants aren’t that fast to react. More eyes are better anyway 5) Try to pick markets with reputable curators inside. I don’t wanna say they signal quality definitively but I don’t trust myself enough to vet a market fully so I'd ride on the coat tails a bit. 6) If you are considering to spread capital across markets and don't wanna keep looking at yields to ensure that they are sufficiently high, consider looking at markets at a high rate at target utilization. I am still playing around with Morpho Markets and can imagine some problems and solutions that can be built. In all I think its quite fun and there are definitely more things to ponder about. Maybe reading some risk management blogs from curators to see how they think as next step

nano banana knows what is a pepe