Martin K
@martinkrung
Aave/Morpho A clash of different worldviews. Both design have their pros and cons. Aave as an entity manages all the risk and also covers any loss. Aave needs deep expertise on all coins and the dynamic of their corresponding markets. You trust the brand, Aave, and they did a very good job of shielding users from risk.
1 reply
0 recast
0 reaction
Martin K
@martinkrung
Does it scale? It has limits, as many different assets, crypto native and non crypto native ones come into existence. It's a jungle, and how should one entity have deep expertise about all assets? Aave chose their risk parameters always on the safe side, and if they don't have the expertise, they don't list assets.
1 reply
0 recast
0 reaction
Martin K
@martinkrung
Having risk parameters on the safe side also lowers the capital efficiency. Morpho has dedicated, independent risk managers, which manage metamorpho vault and and create or attached markets to it, if it fits their risk profile.
1 reply
0 recast
0 reaction
Martin K
@martinkrung
Risk managers can be specialized in markets and if you know markets well, you can choose more risky parameters for your markets, which makes it more capital efficient. The pure Morpho way, would be that they only manage the protocol, maybe with a costume white label front end,
1 reply
0 recast
0 reaction
Martin K
@martinkrung
where the risk managers use the infrastructure, but any hiccups do not affect the Morpho brand. Now Morphos brand suffers from spill over of quality issues from one of the risk managers.
1 reply
0 recast
0 reaction
Martin K
@martinkrung
Does it scale? It may scale better than Aave, but has reputation risk for Morpho, even if they are not risk manager. And: In an easy markets, users may flock to the risk manager who takes more risk, the same risk manager who are whipped out if the markets are in turmoil.
1 reply
0 recast
0 reaction
