Nexus Capital Pool liquidity is intended to be utilised in productive venues, following the investment philosophy described here and Nexus Community leanings expressed on various posts in the forum. The Nexus Capital Pool approach is similar to how an investment company would invest sums from the premiums until claims are paid, in a rather conservative fashion.
This RFC proposes allocating 5% of the 96,956 ETH (i.e. 3.35% of the Total Capital Pool Liquidity) in Morpho-Aave V2/V3 to earn interest from lending ETH while maintaining directional long exposure to ETH
Morpho is a lending protocol, the third biggest on Ethereum after Aave and Compound, with +$700m currently deposited. Morpho improves the capital efficiency of positions on lending pools such as Aave and Compound by matching lenders and borrowers peer-to-peer, strictly improving APY on both sides. While offering superior rates, Morpho preserves the same user experience, liquidity, and parameters as the underlying lending protocol.
Morpho has raised $20M, with the latest $18M funding round led by a16z crypto and Variant.
On Morpho, depositors/borrowers can receive two rates:
If there are not enough peers to match the total amount that a user deposited/borrowed, it is possible to have some funds matched and the rest sourced through the pool. In this case, the liquidity that matches P2P will earn the P2P APY while the rest of the liquidity will earn the pool's APY. Either way, users always have the incentive to deposit in Morpho as they’re getting better/equal rates equal to one of the underlying protocols alongside MORPHO tokens that are currently distributed
Using Messari’s data from Q1-23, Morpho-Aave outperforms the underlying pools by:
Morpho matches users Peer to Peer using a matching engine. Learn more