Why Auto Vaults

Morpho already has many public vaults managed by risk curators. Each curator has their own risk profile and strategy. While this gives users options, the model has fundamental problems:

High Fees for Large Deposits Vaults charge performance fees up to 25% of earned interest. This disproportionately hurts larger depositors.

Incentive Misalignment Risk curators maximize revenue by growing total deposits, not by optimizing returns per dollar or minimizing risk. They can also be bribed to allocate funds to riskier markets.

Trust Requirements You must trust curators and constantly monitor their behavior. If they turn malicious, you need to withdraw quickly.

DeFi's core promise is removing middlemen. Auto Vaults deliver on that promise.

How it Works

Monarch Auto Vaults use the same vault role structure as Morpho Vault V2.

That means the vault itself is configured with roles that separate:

• who controls permissions
• who defines risk limits
• who is allowed to reallocate capital
• which contracts the vault can use to interact with markets

Monarch lets you configure those roles through the Auto Vault workflow, then operate the vault inside the risk boundaries you set.

The Setup

1. Deploy your vault at monarchlend.xyz/autovault
2. Set the vault's risk parameters, including market caps, collateral caps, and adapter caps
3. Assign allocators if you want Monarch to rebalance capital on the vault's behalf
4. Review the vault's active adapters and role configuration
5. Deposit and let the vault operate inside your chosen limits

Learn more about Morpho Vaults V2.

How Auto Vaults work today

Today, the key operating model is:

• the Owner controls permissions
• the Curator defines the vault's risk boundaries
• the Allocators can move capital between approved opportunities inside those boundaries
• the Adapters are the contracts the vault uses to interact with supported protocol routes

If you assign Monarch as an allocator, Monarch can re-allocate capital on the vault's behalf, but only within the market, collateral, and adapter limits the vault configuration allows.

Currently, the only active Monarch allocator described in the frontend is the Max APY / Chill APY agent.

What Auto Vaults will support next

The next major role expansion is Sentinels.

Sentinels are the future safety-oriented role in the vault model. Their purpose is not to optimize for yield, but to derisk the vault when needed.

A useful way to think about the system is:

• Allocators seek better allocation inside the allowed risk envelope
• Sentinels will reduce risk when conditions require it

So after setup, Auto Vaults are designed to give users both:

• delegated capital allocation through allocators
• future delegated derisking through sentinels