[Morpho Co-Founder Responds to Liquidity Shortage in Funds Pool: A Natural Mechanism Under Stress]
On November 6, Morpho co-founder Merlin Egalite addressed the issue of liquidity shortages in certain funds pools, stating that this is not a system vulnerability but rather a natural operational mechanism under market stress. When the market is under pressure, lenders may withdraw funds en masse, leading to an increase in fund utilization rates, a decrease in liquidity, and even a temporary lack of available liquidity. To restore balance, the interest rate model will automatically raise borrowing rates. Taking Morpho as an example, its target fund utilization rate is 90%, and in extreme cases, when the utilization rate surges to 100%, the interest rate will increase fourfold, with the market typically rebalancing within minutes. Egalite emphasized that the liquidity shortage is localized and controllable, affecting only a small number of funds pools, and does not indicate losses or bad debts.