1. Overview:
This SIP proposes re-deploying all currently deployed Morpho V2 arks across WETH, USDT and the USDC Vaults on Ethereum in order to address the lack of instant liquidity from these arks.
2. Motivation:
These new versions of Morpho V2 Vault arks provide a workaround which allows for instant liquidity to be available via onchain withdrawals, causing fewer funds appearing to be locked, and allowing a greater degree of exposure to Morpho V2 Vaults.
What is currently the issue?
Morpho’s V2 Vaults break the 4626 standard, by always returning 0 to maxWithdraw and maxRedeem which means the standard onchain verification of which markets can be withdrawn from breaks. This is also applicable for maxDeposit and maxMint, however this does not affect Summer Arks.
What has been done?
A lot of thanks goes to the Summer.fi engineering team who have created and heavily tested a partial workaround, which will improve the experience of using Morpho V2 Vaults within Summer Lazy Vaults.
When calling maxWithdraw or maxRedeem it will now perform an additional onchain check to previewRedeem or previewWithdraw with the balance of the Ark to see if it can succeed. If it does, then it provides instant liquidity of the full amount, otherwise still return 0.
If the ark balance is greater than the current liquidity, it will be down to the keepers to maintain a balance less than the current liquidity if possible.
It should be noted these new, improved arks will be part of the deployment for the DAO Risk-Managed Vaults.
Removing initial deployed arks
If this vote passes and executes, it is requested that @BlockAnalitica when increasing the caps of these new markets, reduce the caps of the other markets to 0. Once all liquidity has been removed from those markets, a new SIP will be proposed in order to remove the old arks from the affected Vaults.
3. Specification:
To be completed and updated here once the new arks are deployed.
4. Risk Assessment:
These changes are not expected to introduce any additional risk to the protocol or the DAO.
5. Voting:
A YES will onboard the selected Morpho V2 Vault arks in the specification with risk caps set to 0. Voting NO will not onboard any new arks.