TL;DR: Morpho Vaults V2 launches today, setting a new standard for asset curation, otherwise known as noncustodial asset management. It offers the same trusted vault experience as Morpho Vaults V1 but with several innovative enhancements. Alongside the most notable change — the ability to allocate to any current and future versions of Morpho — it brings more options for advanced risk management, an updated role-based governance, and customizable access controls for institutional-grade compliance. Initially, Morpho Vaults V2 will only allocate to Morpho V1 (either Markets V1 or Vaults V1) until Morpho Markets V2 launches later this year.

Morpho V2 consists of two core components: Morpho Vaults V2 (”Vaults V2”) and Morpho Markets V2 (”Markets V2”). Vaults V2 is rolling out first, starting today, with Markets V2 coming later in the coming months.

Until the deployment of Morpho Markets V2, Morpho Vaults V2 will initially allocate deposits to Morpho Vaults V1 and later Morpho Markets V1. Once Markets V2 launches, Vaults V2 will start allocating to provide deep liquidity for Morpho V2’s fixed-rate, fixed-term lending markets from day one.

Morpho Vault V2 enables anyone to create noncustodial vaults that allocate deposited assets to any current or future Morpho protocols, including Morpho Market V1, Morpho Market V2, and Morpho Vault V1.

Depositors of Morpho Vault V2 earn from interest paid by borrowers without having to manage their positions actively. The management of deposited assets is the responsibility of different roles (curator and allocator) and involves allocating and rebalancing liquidity.

For depositors, Morpho Vaults V2 offers the same trusted and familiar experience as Morpho Vaults V1. Vaults V2 support a single deposit asset (e.g., USDC, USDT, ETH), generate a variable return, allow instant withdrawals, and remain completely noncustodial, but now with several key improvements.

1. More Differentiated Strategies: Vaults V2 can allocate across any Morpho protocol, including Markets V1, Vaults, and soon Markets V2. This flexibility, combined with Markets V2’s fixed-rate, fixed-term loans, will give curators a unique ability to offer highly differentiated vaults.
2. Revamped Role System: Configurable segregation of duties enables institutional-grade compliance. Owners handle high-level governance, curators set risk parameters, allocators manage day-to-day capital allocation, and sentinels provide emergency oversight.
3. Advanced Risk Management: A newly developed ID system lets curators set both absolute and relative caps based on shared risk factors (collateral assets, markets, protocols). For example, a curator could cap total stETH exposure across all markets to $50M while limiting individual stETH markets to a maximum of $30M each.
4. Customizable Access Controls: Optional gate contracts let vault creators implement sophisticated deposit/withdrawal rules – from KYC requirements to token-gated access – while maintaining the option to keep vaults completely permissionless.
5. In-Kind Redemption: Through flash loan-powered redemptions, users can withdraw their position even when the vault lacks immediate liquidity. This lets users exit a vault anytime by converting vault shares directly into underlying market positions, enhancing noncustodial properties of Vaults V2.
6. Future-proof architecture: Vaults V2’s flexible adapter architecture allows them to remain immutable while automatically being compatible with all current and future Morpho protocols without requiring upgrades or migrations.

Morpho Vaults V2 is open-source under GPL-2.0-or-later license and available here.

Vaults V2 is designed to become the global standard for asset curation, extending far beyond Morpho-only use cases. Anyone wanting to deploy noncustodial strategies onchain can leverage Morpho’s battle-tested infrastructure and flexible architecture to build sophisticated solutions, whatever the use case.

Morpho Vaults V2 is a fully onchain, noncustodial solution that prioritizes security.

The combination of timelocks, in-kind redemptions, and role-based responsibilities gives users absolute certainty about how their assets can be curated and guarantees that vaults remain completely noncustodial.

The codebase has undergone multiple security audits by tier 1 firms: Spearbit, Blackthorn, Chainsecurity, Zellic, and a Cantina competition. The contracts are immutable, meaning the core logic can’t be changed post-deployment.

Many core properties are formally verified using Certora Prover, with additional verifications in progress.

Vaults V2 is included in Morpho’s $1.5M bug bounty on Cantina and Immunefi.

Morpho Vaults V2 are live now on Ethereum, with deployments on other chains to follow.

Visit app.morpho.org to start depositing, or check out our documentation to learn how to become a vault curator.