Morpho, a decentralized finance (DeFi) lending protocol, launched “Vaults V2” on September 29, the second version of its self-custody asset management vault system.  

As announced, the update is now available and aims to become a standard for self-custodial asset management on Ethereum and, later, on other networks.  With Vaults V2, any user can create vaults that automatically manage deposits, delegating the task of investing those funds in different versions of the Morpho protocol itself.  

Vaults V2 maintains the core experience of its predecessor (a single deposit asset, variable yield, instant withdrawals, and self-custody) but incorporates features geared toward “institutional-grade” use cases. 

Among the new features presented in the announcement are: 

• Ability to allocate funds to any current or future version of Morpho. This enables differentiated strategies and initial liquidity for fixed-rate and term lending markets. 

• Risk management tools that allow you to set absolute and relative limits for exposures to specific assets or markets. 

• Configurable access controls via optional contracts allow for requirements such as KYC or tokenized access without losing the option of open vaults. 

• A redesigned role system to segregate responsibilities: now there are separate people or entities for each task: owners define governance, curators set risk limits, allocators manage day-to-day capital, and sentinels monitor for emergencies. 

• Flash loan withdrawal mechanism: allows users to withdraw their funds even if the vault has no liquidity available at that time, thus maintaining direct control over their assets. 

In addition, the release states that Vaults V2 features an adaptable architecture that makes it compatible with future versions of Morpho without migrations or contract updates. 

Finally, the Vaults V2 code is open source and, according to the team behind the protocol, has passed security audits from firms such as Chainsecurity, Zellic, Spearbit, and Blackthorn.  

According to Morpho, these features are intended to provide depositors with certainty about how their funds are managed and  ensure that the vaults remain non-custodial.