# Add MORPHO market to Moonwell on Base

**URL:** <https://forum.moonwell.fi/t/add-morpho-market-to-moonwell-on-base/1602>\
**Category:** Community Proposal\
**Created:** [February 26, 2025, 7:47pm UTC](https://forum.moonwell.fi/t/add-morpho-market-to-moonwell-on-base/1602 "2025-02-26T19:47:23Z")\
**Posts on this page:** 1\
**Showing post:** 4

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**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex017/user_avatar/forum.moonwell.fi/gauntlet/32/780_2.png) [@Gauntlet](https://forum.moonwell.fi/u/Gauntlet)\
**Post date:** [March 25, 2025, 5:37pm UTC](https://forum.moonwell.fi/t/add-morpho-market-to-moonwell-on-base/1602/4 "2025-03-25T17:37:33Z")

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# [Gauntlet] - MORPHO Recommendations

# Summary

Gauntlet **recommends** onboarding MORPHO as collateral in Moonwell’s Core lending markets on Base. This decision follows a comprehensive evaluation of key risk factors, including liquidity, market depth, volatility, and overall asset suitability within the protocol’s risk framework.

We recommend setting a conservative Collateral Factor (CF) of 65%, and a Supply Cap aligned with slippage tolerance in the 25–30% range. The combination of a conservative CF and a relatively aggressive supply cap strikes a balance between risk mitigation and capital efficiency.

## Risk Parameter Recommendations

| Parameters | Values |
| --- | --- |
| CF | 65% |
| Supply Cap | 1M MORPHO |
| Borrow Cap | 500K MORPHO |
| Protocol Seize Share | 30% |

## IR Recommendations

| IR Parameters | Recommended |
| --- | --- |
| Base | 0 |
| Kink | 0.45 |
| Multiplier | 0.23 |
| Jump Multiplier | 5 |
| Reserve Factor | 0.3 |

## Supporting Data

### DEX TVL

| pool\_name | pool\_type | pool\_url | pool\_tvl\_usd | volume\_24h\_usd |
| --- | --- | --- | --- | --- |
| MORPHO / WETH 0.3% | aerodrome-slipstream | [Link](https://www.geckoterminal.com/base/pools/0xb5f0b4ae66c14f7efaa9aa1468e8fc536a3e288c) | $1.83M | $270.37K |
| MORPHO / WETH 0.3% | uniswap-v3-base | [Link](https://www.geckoterminal.com/base/pools/0x2f42df4af5312b492e9d7f7b2110d9c7bf2d9e4f) | $290.88K | $101.25K |
| MORPHO / USDC 1% | uniswap-v3-base | [Link](https://www.geckoterminal.com/base/pools/0x2043b296ffc6b2d3bf4a3f3167d2afb3b0fbdbee) | $103.38K | $2.44K |

The total DEX TVL for MORPHO on Base is currently around $2M, with the majority of liquidity concentrated in the MORPHO \<\> WETH pool. A concentrated MORPHO \<\> WETH liquidity structure means MORPHO’s price stability is heavily dependent on WETH liquidity.

The overall liquidity remains relatively shallow. However, it is important to recognize that MORPHO is primarily a governance token within the Morpho ecosystem. Governance tokens often exhibit lower liquidity.

 ![Screenshot 2025-03-20 at 9.02.20 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/1/1841ded4cb6e1eacb1dab907fc3e87ad0ec715af.png)

If adoption and incentives continue to expand, the liquidity constraints may gradually ease, making it a stronger candidate for increased collateral utility in the future.

**Protocol TVL & Token Liquidity**

 ![Screenshot 2025-03-20 at 9.06.08 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/5/5e9db959ba58c3ab9578006577c97e1de010f2c8.png)

Given all relevant factors, taking a cautious approach by a conservative Collateral Factor is advisable to minimize risks associated with potential liquidations in low-liquidity environments.

### Liquidity & Slippage

**5% Slippage**

 ![Screenshot 2025-03-19 at 9.39.46 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/b/b721f7a5a4e25f19f686dece8e94c1d4751ecfcc.png)

**10% Slippage**

 ![Screenshot 2025-03-19 at 9.40.09 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/a/ac82a8e9fe3f210b93a10fab9b674b132e726cf2.png)

**25-30% Slippage**

Executing a ~$1.5M MORPHO sell order in the current market conditions would result in an estimated 25-30% slippage.

 ![Screenshot 2025-03-21 at 8.33.40 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/2/227de2ca9f3eb0701c63f02e01fbd782bb597232.jpeg)

### Price Volatility

Over the past 180 days, MORPHO’s annualized daily log returns have fluctuated between a high of +36% and a low of -23%, reflecting the asset’s sensitivity to both upward momentum and downside corrections. The 30-day annualized log volatility is currently 183%, highlighting MORPHO’s exposure to substantial price swings over short time horizons.

 ![Screenshot 2025-03-20 at 8.00.08 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/5/5e5877e213c4e31dff42e18309c88dd6489cf9d8.png)  
 ![Screenshot 2025-03-20 at 8.00.19 AM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/c/c8e20ea55cbac5d2d4eb07dde5056e13c7a81f7e.png)

## IR Parameter Specifications

**IR Curves**

 ![Screenshot 2025-03-04 at 1.07.04 PM](https://europe1.discourse-cdn.com/flex017/uploads/moonwell/original/2X/a/a75bee559fbbe8a4c0c23b59810a7fe7ddad259d.png)

| Utilization | Borrow APR | Supply APR |
| --- | --- | --- |
| 0 | 0 | 0 |
| kink | 10.35% | 3.26% |
| 100 | 285.35% | 199.74% |

We recommend an IR curve with a borrow APR of 10.35% at kink.

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