Liquidity depth per major asset
Morpho V1 (Morpho Blue + MetaMorpho)'s assessment for RD-F-065 — scored yellow on the v1.7.0 rubric. The evidence below is the curator's reasoning for this score.
Evidence summary #
2%/5% slippage depth not measured numerically for individual markets. Flagship collateral (wstETH, WETH, WBTC) has deep DEX liquidity. Long-tail permissionless markets have unknown liquidation liquidity depth. LIF ~5% (86% LLTV markets) may be insufficient for fast-moving cascades in thin markets. PAXG/USDC exploit Oct 2024 demonstrated real market-level liquidation failure.
Detail #
Morpho Blue liquidation relies on external liquidators interacting with DEX pools. For flagship markets (wstETH/USDC, WETH/USDC), collateral assets have deep Uniswap v3 / Curve liquidity and Chainlink oracles with low deviation thresholds. However, LIF formula gives ~5% bonus at 86% LLTV (LIF = min(1.15, 1/(0.3×0.86 + 0.7)) ≈ 1.05), which is thin for fast-moving cascades. PAXG/USDC oracle misconfiguration (Oct 2024, $230k loss) demonstrated that specific markets can fail at liquidation level when oracle data is misconfigured. Permissionless markets with long-tail collateral may have LIF up to 1.25 (at 60% LLTV) but also have the thinnest underlying DEX liquidity. Yellow: mainstream markets likely have adequate depth; long-tail markets are unknown and not enumerable without on-chain reads.
Sources #
- DocsMorpho Blue liquidation conceptsdocs.morpho.org/learn/concepts/liquidation — LIF formula: min(1.15, 1/(beta*LLTV + (1-beta))); at 86% LLTV LIF ≈ 1.05 (5% bonus)retrieved 2026-04-27
- PAXG/USDC exploit post-mortemPAXG/USDC oracle exploit Oct 2024: $230k loss in one market; demonstrates market-level liquidation failure moderetrieved 2026-04-27
Methodology #
Measure on-chain liquidity depth for protocol-held assets at 2% and 5% price impact in USD.
See the full factor methodology and distribution across all protocols →