Morpho Network · Diagram

Morpho Midnight — Architecture

Visual map of fixed-rate, fixed-term lending: network placement, offer matching, market structure, and credit/debt unit lifecycle.

Morpho network · two primitives

Midnight is not a Blue V2. Both coexist — variable open-term pools vs fixed-maturity offer books.

MORPHO NETWORK Morpho Blue Variable rate · open-ended Shared pool IRM pricing Utilization drives borrow & supply APY Morpho Midnight Fixed rate · fixed maturity Offer orderbook CU / DU units Rate locks at fill · zero-coupon payoff same collateral ecosystem
Blue — flexible liquidity Midnight — term-matched credit

Offer-based matching (not a pool)

Makers sign offers offchain. Routers index the mempool. Takers fill onchain — rate and term lock atomically.

Capital sourced via callbacks at fill not pre-locked while the offer sits in mempool Maker Signs offer rate · size · expiry Mempool Offchain book indexed by router Tenor Router quote · callback Taker Selects quote submits on-chain Midnight Atomic fill CU + DU minted · rate locked publish index route fill Ratifiers prove maker intent (EOA sig or on-chain approval) Partial fills · consumption groups share one budget

Isolated market

Each market is immutable after creation — one loan token, one maturity, one collateral config.

MIDNIGHT MARKET Loan token USDC Collateral cbBTC Fixed maturity date e.g. 90 days from fill No admin parameter changes after deploy

Credit & debt units

Zero-coupon positions — fungible units with payoff at maturity, tradable before then.

LENDER CU Credit unit BORROWER DU Debt unit 1:1 1 CU = claim on 1 loan token at maturity 1 DU = obligation to repay 1 loan token Secondary market: sell CU before maturity at market price (not hold-to-maturity return)

Position lifecycle

From signed quote to settlement — fixed economics bind only when a taker fills onchain.

1 Quote Maker publishes Rate not locked 2 Fill Taker matches CU + DU minted 3 Hold Trade units Early exit optional 4 Maturity Borrower repays CU → USDC ↻ Roll Auto-renew via callback RATE LOCKED Fixed rate and maturity clock start at step 2 (fill), not step 1 (quote)
Fixed rate and maturity timestamp start at fill, not when the offer is published.

At fill · unit economics

Example: 100K USDC deployed · 5.2% APR · 90-day maturity on a cbBTC/USDC market.

AT FILL (TODAY) LENDER Spend 100,000 USDC Receive ~101,282 CU P ≈ 0.9873 · each CU redeems for $1 at maturity Rate locked: 5.2% APR · 90 days atomic BORROWER Receive 100,000 USDC Owe ~101,282 DU Post cbBTC collateral · fixed term Repay loan tokens before maturity AT MATURITY (+90 DAYS) Borrower repays ~101,282 USDC CU burned → Lender receives ~101,282 USDC Return ≈ 1,282 USDC (~1.28% over 90 days = 5.2% APR)

Capital efficiency · quote without locking

Lenders can keep USDC in Morpho Vault V2 while quoting Midnight. Callback migrates capital only when filled.

WHILE QUOTING Morpho Vault V2 Variable supply APY Signed lend offer In mempool · not locked TAKER FILLS ON FILL Callback Vault V2 → Midnight CU position live Fixed rate locked Tenor Finds executable path Quote aggregation Vault → Midnight migration callbacks Ladder: SeriesVault quotes via Tenor · pools group entities One lender of record · share ledger per entity