Signaling Vote: allocate 4848 ETH of Nexus Capital Pool in Morpho

Summary

Nexus Capital Pool liquidity is intended to be utilized in productive venues, following the investment philosophy and Nexus Mutual community leanings expressed on various posts in the Nexus Mutual forum.

This signaling vote is being held to gauge member support for a proposal to allocate 4848 ETH (or 3.35% of the Total Capital Pool Liquidity) in Morpho-Aave V2/V3 to earn interest from lending ETH while maintaining directional long exposure to ETH through an Enzyme Finance integration.

Members can find and review a very detailed version of this proposal here. This vote is a non-binding signaling vote, which will be used to gauge members' support for this proposal.

Voting Choices

• Yes: Nexus Mutual should utilize a portion of the Capital Pool in Morpho-Aave V2/V3. It should do so through Enzyme FInance integration for 3.35% of the Capital Pool.
• No: Nexus Mutual should not utilize a portion of the Capital Pool in Morpho-Aave V2/V3.
• Abstain

About Morpho

Morpho is a lending protocol, the third biggest on Ethereum after Aave and Compound, with +$700m currently deposited.

Morpho improves the capital efficiency of positions on lending pools such as Aave and Compound by matching lenders and borrowers peer-to-peer, strictly improving APY on both sides. While offering superior rates, Morpho preserves the same user experience, liquidity, and parameters as the underlying lending protocol.

Proposed allocation strategy in Morpho

Given the max allocation rules exposed earlier and the degree of risk incurred by Morpho, an initial deposit of 5% of the 96,960 ETH (i.e. 4.848 ETH or 3.35% of the Total Capital Pool Liquidity) into Morpho-Aave is proposed.

This amount would be earning improved rewards from lending ETH while leaving substantial room for higher yield/riskier strategies.

Morpho smart contract risks

Morpho adds extra lines of code compared to a lending pool alone. The top audit firms worldwide performed over 20 audits to limit this additional risk. Morpho Labs team also formally proved part of the protocol in a Yellow-Paper and with the help of Certora.

In more detail:

• Morpho is the number 1 out of 300+ projects on DeFi Safety with a 98% mark.
• 20 audits were made on Morpho contracts with top-tier auditors like Trail of Bits, Chainsec, Spearbit, etc. Morpho has a recurrent partnership with Spearbit.
• Parts of Morpho’s code were formally verified in Why3 or with Certora’s automatic formal prover
• Morpho’s logic has been formally described in the Yellow Paper. The Yellow Paper also proves important properties about the improvement of Morpho compared to underlying lending pools.
• Morpho has a large $555,555 Immunefi Bounty for smart contracts and front end

Depositing through Enzyme

Morpho is aware of the relationship Nexus Mutual has with Enzyme Finance, the work done on the custom Chainlink oracle reporting the value in ETH back to the Capital Pool, (necessary to keep accounting the assets for possible claims) and other Enzyme features potentially important to Nexus Mutual. Therefore, depositing into Morpho could be done through a vault managed by Enzyme. The Enzyme <> Nexus Mutual integration is currently being built and audited by Enzyme and will be ready around mid-July of this year.