Market Rate

Borrow and supply yields should align with market rates to retain suppliers and borrowers:

• Stablecoin supply and borrow APYs should not differ from stablecoin rates on other DeFi protocols by more than 1-3%.

• WETH staking yields (currently around 4%) should upper bound the WETH borrow rates using wstETH (LRT/LSTs) collateral.

Morpho markets are single collateral/supply markets (as opposed to blended), which increases capital efficiency. Rates can be targeted to be superior for both borrowing (lower) and supply (higher). Ensuring competitive borrow and supply rates helps retain borrowers, facilitating sustainable yield for suppliers in the vault.