Morpho
KPK vaults on Morpho
Protocol overview
Morpho is a lending environment enabling ERC-4626 vaults that accept a single deposit asset and allocate it across underlying isolated lending markets. Depositors supply liquidity and earn lending yield; curators decide allocation eligibility and set safeguards.
Vault architecture: KPK curation runs on Morpho v2 vaults, which allocate directly into Morpho v1 markets via the Markets V1 Adapter. The v2 layer adds function-specific timelocks and supports MORPHO rewards. See Vault Architecture.
Curator model
Morpho uses a curator model: curators decide which lending markets a vault can allocate to and set safeguards. KPK acts as curator for selected Morpho vaults, defining safe operating conditions, selecting eligible markets, and reallocating liquidity when needed. KPK’s curation focuses on three areas: market selection, operational scalability through automation, and bespoke market deployments (where needed). All decisions follow the Risk Framework, which governs eligibility criteria, risk-tiering, and monitoring cadence.
Market selection and withdrawal reliability KPK sets market eligibility, exposure limits, and liquidity buffers. Only markets that pass due diligence are enabled. Each approved market receives a risk tier and a per-market supply cap to limit concentration. Vaults maintain idle buffers designed to support smooth withdrawals.
Real-time automation (agents) and monitoring Vaults are monitored continuously by agents operated by KPK. They are deterministic programs that execute whitelisted functions through KPK’s Permissions Layer. Agents monitor utilisation, liquidity depth, APY shifts, oracle health, and price divergence versus reference venues. When conditions change, they can reduce or disable exposure to a market, increase idle funds, or rebalance across enabled markets within predefined limits.
Rebalancing agent: improves capital efficiency by reallocating across approved markets using a rules-based approach (e.g. tier- and cap-aware water-filling), subject to liquidity and safety checks.
Exit agent: responds to risk alerts (e.g. oracle staleness or divergence) within seconds by reducing or disabling exposure, increasing withdrawable liquidity, and prioritising safe exits within predefined limits. \ This combination delivers fast incident response and steady, rules-driven allocation. For the technical design and allowed actions, see Automation.
Custom market deployments Where needed, KPK works with counterparties (e.g. asset issuers or interested borrowers) to deploy bespoke markets and terms under the same risk framework.
Vault architecture
KPK curation is delivered on Morpho v2 vaults, which sit at the top of the stack and route deposits into individual Morpho v1 markets through a single configured adapter:
v2 vaults are the canonical, curated product. Each holds depositor assets, enforces function-specific timelocks, supports MORPHO rewards, and exposes one or more adapters that define which allocation targets the vault can use.
Markets V1 Adapter is the adapter currently configured on every KPK v2 vault. It allocates directly into individual Morpho v1 markets, the venues where the underlying lending liquidity is held. There is no intermediate v1 MetaMorpho vault in the path: the v2 vault holds positions in v1 markets directly.
v1 (MetaMorpho) vaults were the legacy curated layer. KPK wound down V1 curation at the end of May 2026, and all KPK curation now runs on v2 vaults. The v1 vaults remain onchain and a small number of depositors still hold positions in them, but they are no longer actively curated or rebalanced. New deposits should go to the v2 vaults.
Why this design: v2 separates curation policy from allocation venue. Timelocks, role hierarchy, and reward routing live at the v2 layer; the Markets V1 Adapter is one allocation venue and can be replaced or supplemented by v2-native adapters in the future without touching depositor positions or vault governance.
Liquidity and forceDeallocate
Withdrawals on Morpho v2 vaults are served first from the vault's idle balance, then from the liquidity adapter, a per-vault setting that designates a single market as the withdrawal venue. The liquidity adapter is configured on top of the Markets V1 Adapter and points at one of the v1 markets the adapter holds positions in. Withdrawals beyond idle pull from that one market until either the request is filled or that market's available liquidity is exhausted.
This is a structural difference from the previous Vault V1 Adapter setup, where the v2 vault sat above a v1 MetaMorpho vault that could draw from any of its enabled markets in a single transaction. With the Markets V1 Adapter, KPK selects which market backs withdrawals at any given time; the design favours allocator control over default withdrawal breadth. KPK aims to keep the liquidity adapter pointed at the market with the largest combination of vault exposure and underlying available liquidity, and is building monitoring to support more dynamic rotation.
forceDeallocate covers the remaining case: a withdrawal large enough to exhaust both idle and the liquidity adapter. In practice only very large exits reach this path. A depositor can call forceDeallocate on the v2 vault to pull liquidity from any other market in the adapter back to idle; Morpho's frontend uses it automatically, stitching a single-transaction withdrawal across the full set of listed markets. The call burns vault shares worth a fixed fraction of the amount deallocated, the forceDeallocate penalty, set per-adapter; the burned value remains in the vault and accrues to remaining depositors. KPK's standard value is 0.01% across all vaults. The penalty applies only to forced deallocations: withdrawals served from idle or the liquidity adapter incur no fee, and a large exit can be split into smaller withdrawals served through the normal path, as the rebalancing agent replenishes the liquidity adapter between withdrawals.
The non-zero penalty is a deliberate curation choice. Because the penalty is charged against the caller's own shares (or shares of an address that has approved the caller), a non-zero value restricts forceDeallocate to vault depositors and contracts acting with their approval. At the protocol default of zero, the call is fully permissionless and third parties can rearrange a vault's allocations at no cost. KPK's monitoring agent tracks deallocation activity; on detecting a pattern of allocations being fragmented against the curator's policy, it raises the penalty to 0.5% and triggers an immediate rebalance to restore allocations. See Automation for details. The penalty in force on each vault is listed on that vault's page.
Governance and control
Critical actions follow a layered process designed for transparency, security, and timely response.
v2 vault (curated product): changes that can expand permissions or increase risk (e.g., role updates, enabling a new market, raising allocation ceilings, adding or removing an adapter, or changing risk parameters) execute via KPK multisigs under function-specific timelocks (KPK’s 3/7/14-day schedule, detailed under Key settings and roles below). The Guardian can intervene during the timelock window if required.
v1 vaults (legacy): KPK wound down v1 curation at the end of May 2026. The vaults remain onchain and still hold a small number of depositor positions, but KPK no longer rebalances them or makes governance changes to them.
Operational actions within pre-approved bounds, such as reallocate() between enabled markets, increasing the idle buffer, or setting a market cap to zero, execute under scoped roles and are not timelocked, allowing agents to respond within seconds.
Key settings and roles
The following roles and settings apply across all KPK vaults:
Owner and sentinel: Security Council Safe (5/8)
0x354C92aF243d53A24feb3dFF20372Af7b7c47478Curator and allocator: Curator Safe, with a Permissions Layer for agents (2/5). As well as the KPK Deployer 1 (
0xF0Cf1e3Ec6264b03241826f5b2aBda17B4352A75), KPK Deployer 2 (0x331D9C769185AE25233314859d53c2b9203a1204) and KPK Deployer 3 (0xAF150c6d108D0C2c96BbFc3CeF9B4848b5D99440) holding Allocator roles for emergency scenarios. Visit each vault page for the specific address.Timelocks:
3 days: add adapter; increase absolute or relative cap
7 days: remove adapter, update gates, increase timelock
14 days: adjust management or performance fees
KPK Morpho v2 vaults apply function-specific timelocks to wrapper configuration (adapter, fee, and risk-parameter changes), and are controlled by the same KPK Safes that governed the corresponding legacy v1 vaults.
For detailed configuration, see Morpho v2 Roles and Timelocks, the Morpho Change Log, and the individual vault pages. For protocol-level context on Morpho v2 versus v1, see Morpho documentation.
Allocator usage: KPK does not use Morpho's public Allocator role, reducing the attack surface. Automation is instead scoped through KPK’s Permissions Layer and Morpho’s roles system.
Vault configuration
Enabled markets, caps, risk tiers, oracles, allocation rules, and governance addresses are documented on each vault page and kept up to date in the Morpho Change Log.
Live metrics: Track TVL, APY, allocations, and withdrawal liquidity for KPK Morpho vaults on Dune: https://dune.com/kpk/kpk-morpho-vaults
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