The year is 1995. The rage? Microloans to developing countries. The premise was simple: we can make a positive impact in impoverished nations by providing loans to entrepreneurs for whom the capital threshold to start a sustainable business is relatively low. A famous example was that a Western, middle-class family could loan $5,000 to an African entrepreneur, enabling that person to purchase enough goats (or another basic asset) to kickstart valuable production. You can help the world and make money at the same time!
The verdict is in: maybe those microloans were helpful, but not always. The centralized middle-men entities also made it harder to provide or receive these loans. However, the core premise of these microloans has been a very important part of Web3’s evolution.
Decentralized lending protocols have proven to be one of Web3’s most useful verticals. Providing permissionless, trustless access to a market for lending and borrowing can actually fulfill a promise we believe in. Decentralized access to money can enable you to take the first step toward a big idea without going through a bank. This could be huge for someone who is a brilliant software developer in an underdeveloped country with limited access to capital.
Now, we’re in 2023 and DeFi lending protocols keep getting iterative improvements. In 2022, HAL integrated a notification UI for Aave users to receive customized alerts to better protect their positions. Now, Morpho is providing a gateway to multiple lending markets and providing higher APY to borrowers and lenders by enabling peer-to-peer (P2P) matching.
Naturally, Morpho and HAL have partnered up to provide the users of lending platforms with seamless, customized notifications to make their user experience better and asset protection easier.
This blog will introduce the Morpho platform and showcase a few helpful ways you can use HAL to improve your Web3 experience.
What is Morpho?
If you use lending protocols, then you probably care about two key details: security and attractive APYs..Morpho adds a valuable gateway to lending protocols that provides the security you expect from a platform like Aave with a higher APY. In short, Morpho is an on-chain peer-to-peer layer on top of lending pools. Rates are seamlessly improved for borrowers and lenders while preserving the same guarantees.
How it works
APY on pool-based protocols like Compound or Aave has a wide spread, leading to sup-optimal rates for both parties. This is because these platforms keep capital utilization low so that users can withdraw or borrow funds at any time.
However, when liquidity is matched P2P, capital utilization is 100%. This gives both the borrower and lender a better rate. If P2P matches can provide better rates and utilization, why is it not the industry standard for DeFi lending?
P2P transactions come with many challenges, historically. First of all, you have to find someone to do your deal with. Then, you can’t borrow or withdraw funds whenever you want. Morpho protocol solves these problems.
Morpho, a P2P - Pool Hybrid
Utilizing a unique fall back mechanism, Morpho combines the efficiency of P2P with the instant liquidity associated with lending pools. Users benefit from improved rates while maintaining pool’s depth and flexibility. Morpho mirror’s the on-chain architecture of lending pool oracles, collateral factors, and liquidation parameters, enabling users to withdraw or borrow the billions of liquidity that are available in lending pools with increased loan efficiency.
HAL Notifications for Morpho Users
Aave users greatly benefit from liquidity health factor alerts, so it is natural that Morpho users will also benefit from similar notification recipes. As Morpho provides gateways to Aave and Compound, Morpho users will be excited to see that our integration features many similar notification triggers to make your lending experience easier and safer.
Here’s a quick guide to setting up a HAL notification for your position on Morpho.
1 - Start the setup
On the far right of the screen, there’s a vertically oriented button that says “hal Notifications”. Click that.
This will take you to the HAL app to set up your notification.
You will need to create an account on HAL's website - rest assured, the app is free for you.
Start configuring your notification recipe!
2 - Configure your Trigger
Inside the HAL app, you have four options to choose from.
Tracking Borrow or Supply Rate makes it easy to take advantage of high APY opportunities, or know when to exit a position when the APY has fallen too low
Track Health Factor by threshold is your best friend - set up a conditional trigger that sends you a message whenever your health factor dips too low.
Track Health Factor periodically monitors your health factor, just like the previous trigger, but this one gives you updates on a preset interval (daily, weekly, etc).
Track P2P state update is a neat, unique notification recipe for Morpho. Get instant alerts for P2P matches, letting you know about any change in your P2P / Pool matching status.
3 - Choose your Action
With your trigger chosen, now we’re at the final step… Choose your action! In the screenshot above this text, I’ve chosen to receive an email when my trigger for P2P matching has fired. You can choose Email, Discord, Telegram, Slack, Twitter, or Webhook.
Notice those little blue bubbles inside the “Message” Field? Those are dynamic values that you can alter at need. You can also update the text to say whatever you want. Have fun 🙂.
We are excited to support Morpho’s users. That platform is just plain cool!
Morpho.xyz end users can receive personalized notifications on a variety of Web2 channels like Email or Social accounts using our no-code recipe on Hal.xyz.
For most end-users, a free account is all you need to get started and have a better experience as a Web3 Native.
While the current state of DeFi lending is perhaps not as lofty as the vision of microloans decades ago, the value of the service provided to Web3 end users is high. Cutting out a centralized middle-man financial system enables anyone, in any part of the globe, to gain access to liquid financial markets to earn passive income or get the capital they need to kickstart an idea. What you do with the money is up to you, whether that’s to start an agrarian production or go skiing in the French Alps.
If you want to send us a message with an idea for how to improve this integration, an idea for another protocol to partner with, or just want to tell us you love this tool (we enjoy praise), please drop us a line at firstname.lastname@example.org.