Defi

Aave V4 introduces a Hub and Spoke architecture that fundamentally changes how lending markets access liquidity. This post explains the architecture and walks through building a custom Spoke.

Morpho Vaults V2 introduces in-kind redemptions, an emergency exit mechanism that lets users escape illiquid vaults by swapping shares for direct market positions using flashloans.

In permissionless markets, oracle choice is critical. The xUSD/USDC depeg on Morpho Arbitrum shows what happens when oracles fail - no liquidations trigger, utilization hits 100%, and withdrawals stall.

Morpho uses an adaptive interest rate model that dynamically adjusts rates based on supply and demand to maintain optimal market utilization and balance between lenders and borrowers.