Vault Limits

Fig 2. Chart displaying targeted effective exposure range for USDe 5x vault which utilises Morpho USDe/DAI 86% LLTV Pool

Fig 3. Chart displaying targeted effective exposure range for USDe 7x vault which utilises Morpho's USDe/DAI 91.5% LLTV Pool

Fig 4. Chart displaying targeted effective exposure range for sUSDe 5x vault which utilises Morpho's sUSDe/DAI 86% LLTV Pool

Fig 5. Chart displaying targeted effective exposure range for sUSDe 7x vault which utilises Morpho's sUSDe/DAI 91.5% LLTV Pool

Fig 6. Chart displaying targeted effective exposure range for weETH 4x vault which utilises Morpho's weETH/WETH 86% LLTV Pool

Fig 7. Chart displaying targeted effective exposure range for wstETH 11x vault which utilises the WETH pool from Spark Finance

lov-Strategy Vault Deposit and Withdrawal Limits

Users should note that lov-Strategy vaults are subject to deposit and withdrawal limits based on the current Asset to Liability (A/L) ratio for that vault. The A/L ratio is simply the inverse of the Loan-to-Value ratio (LTV). These protective thresholds protect the integrity of the vaults and mitigate the risk of bad debt. In short, if a new lov-Strategy vault deposit or withdrawal would push the Asset / Liability ratio (or LTV) above the upper vault threshold or below the lower vault threshold, the transaction will revert.

The A/L ceiling (USER_AL_CEILING) prevents new deposits from reducing the leverage applied in the vault too much until a RebalanceDown can be executed. For the USDe 5x and the sUSDe 5x vaults, USER_AL_CEILING are both set to 70% LTV (Fig 2 and 4) whereas for the lov-wstETH vault, it is set to 86% LTV (Fig 7).

Similarly the A/L floor (USER_AL_FLOOR) prevents withdrawals that increase vault leverage too much until vault health ratio permits, or a RebalanceUp can be executed. For USDe 5x and sUSDe 5x vaults, the USER_AL_FLOOR is set to 83.5% and 84.5% LTV respectively (Fig 2 and 4) whereas for the lov-stETH vault, it is set to 89.9% LTV (Fig 7).

Once the vault automation adjusts the vault holdings back to the Targeted Effective Exposure range, or if user flows move the vault A/L ratio back to the nominal range, new deposits and withdrawals can then resume.

When USER_AL_CEILING is reached:

• No new deposits until a RebalanceDown is triggered

• RebalanceDown may allow new deposits to occur after the A/L ratio is reduced

• Any new Deposits that would move the A/L ratio above the ceiling will revert

When USER_AL_FLOOR is reached:

• No new withdrawals until a RebalanceUp is triggered

• RebalanceUp may allow new withdrawals to occur after the A/L ratio is raised

• Any new Withdrawals that would move the A/L ratio below the floor will revert