A
Allocation (Vault) The percentage of a vault’s total assets deployed into a specific lending market. Vault curators set and adjust allocations to optimize yield. APY (Annual Percentage Yield) The effective annualized return on a supplied or borrowed position, compounding interest over time. Dynamo displays both supply APY and borrow APY for each market.B
Bad Debt Debt that cannot be fully repaid because the collateral value has fallen below the outstanding loan value. On Morpho, bad debt is socialized across suppliers in the affected market. Bundler A Morpho smart contract that batches multiple protocol actions (e.g., supply + borrow) into a single transaction, reducing gas costs and enabling complex flows like looping.C
Collateral An asset deposited by a borrower to secure a loan. On Dynamo/Morpho, each market specifies exactly one collateral asset and one loan asset. Curator (Vault Curator) The entity responsible for managing a MetaMorpho vault, setting market allocations, caps, and risk parameters. Curators act on behalf of vault depositors.H
Health Factor A numeric score representing the safety of a borrowing position. Calculated as(collateral value × liquidation threshold) / borrowed value. A health factor below 1.0 triggers liquidation.
I
IRM (Interest Rate Model) The smart contract that determines borrow and supply interest rates based on market utilization. Morpho uses a linear + kinked IRM where rates rise steeply above the target utilization.L
Liquidation The process of repaying a portion of an undercollateralized borrower’s debt in exchange for their collateral at a discount. Triggered when health factor falls below 1.0. Liquidation Incentive The bonus paid to liquidators, expressed as a percentage of the seized collateral. Incentivizes external actors to keep the protocol solvent. Liquidation Threshold (LT) The LLTV ratio a position can reach before becoming eligible for liquidation. LLTV (Liquidation Loan-to-Value) The ratio at which a position becomes eligible for liquidation on Morpho. Set per market at deployment and cannot be changed. Example: an LLTV of 86% means liquidation triggers when the loan value exceeds 86% of collateral value. LTV (Loan-to-Value) The current ratio of a borrower’s outstanding debt to the value of their collateral.LTV = loan value / collateral value. Must stay below the LLTV to avoid liquidation.
M
Market (Morpho Market) An isolated lending pool defined by a unique combination of: loan asset, collateral asset, oracle, IRM, and LLTV. Each market is independent; risk does not cross between markets. MetaMorpho The vault layer built on top of Morpho. MetaMorpho vaults aggregate deposits and deploy them across multiple Morpho markets, abstracting market selection from users. Morpho The underlying permissionless lending protocol that Dynamo Finance is built on. Morpho provides the core market infrastructure; Dynamo adds tooling, automation, and rewards on top.O
Oracle A smart contract that provides on-chain price data for collateral and loan assets. Each Morpho market is tied to a specific oracle at deployment. Oracle failures can affect liquidations.R
Reserve Factor The percentage of interest paid by borrowers that is captured as protocol revenue rather than distributed to suppliers.S
Shares (Vault Shares) ERC-20 tokens representing a depositor’s proportional ownership of a MetaMorpho vault. Share value increases as the vault earns yield. Supply Cap The maximum amount of assets that can be deposited into a specific Morpho market via a MetaMorpho vault. Set by the vault curator to manage concentration risk.U
Utilization Rate The ratio of total borrowed assets to total supplied assets in a market.Utilization = total borrows / total supply. Higher utilization leads to higher interest rates.
V
Vault See MetaMorpho. A smart contract that pools user deposits and allocates them across Morpho markets to optimize yield.Missing a term? Open an issue or reach out via the Dynamo Discord.