Passive quoting
Passive quoting keeps your funds on offer to borrowers at fixed rates you set, for terms up to 90 days, while they earn a variable rate. Funds that come back are quoted again, until you cancel.
Passive quoting is available on Tenor markets that have an Open Term vault. It is not available for OTC positions.
How it works
- Your funds sit in a source: Open Term, the market's variable-rate vault (the same Morpho Vault-V2 that Earn while you wait uses), or a managed vault.
- You set a curve: for each term, the fixed rate you lend at and the rate at which your lend can exit early.
- Borrowers take your quotes. Each match moves that amount into a fixed-rate lend at your rate or better.
- Funds come back to the source at maturity, after an early repayment, or after an early exit. They earn the variable rate again and are quoted again on the same curve.
Anyone, typically a keeper, can execute each move, but only at your curve's rates. See the Market Making Policy for the onchain details.
Set it up
- From a lend order: in the Renewal selection step, choose passive quoting instead of a one-time offer. On a limit order, your funds go to Open Term right away and the curve replaces the limit offer. On a market order, the lend fills now and is quoted again at maturity.
- From the Portfolio page: on an Open Term or managed vault row, choose Enable passive quoting, select the markets, and set a curve for each.
Then choose what to quote:
- Quote 1 month: one lend rate for every maturity up to about a month out, with exits at 0%.
- Quote up to 90 days: a custom curve with points at 30, 60 and 90 days, each with its own lend and exit rate. Remove the longer points to quote a shorter range.
One source can quote several markets on its chain that lend the same asset, each with its own curve, all from the same funds. A market can be quoted from only one source at a time.
Your curve
Each point on the curve has two rates:
- Lend rate: the fixed rate you lend at for that term, from 0.25% to 15%.
- Exit rate: the rate at which someone can buy your lend before maturity.
Quotes cover maturities from 1 hour out to your last point. Up to the first point, its rates apply; between points, rates follow a straight line.
A new curve starts with:
| Term | Lend rate | Exit rate |
|---|---|---|
| 30 days | 4.50% | 0% |
| 60 days | 4.75% | 0% |
| 90 days | 5.00% | 0% |
Here, a maturity 45 days out is quoted at 4.625%. If these rates would fill right away against borrow offers, the app raises the whole curve in 0.25% steps until they don't. When you start from your own order's rate, the curve starts at that rate instead, with the same steps.
At each point on your curve, the lend rate must be above the exit rate. This is enforced onchain.
Be careful when creating several passive quotes, especially if their policies overlap on fixed-rate markets. Capital can then be recycled across markets, and if the rates are not set carefully, this can lead to losses.
An exit at 0% is an exit at par: the buyer pays the full maturity value, your principal plus all the interest, just earlier. Raise an exit rate to free up funds sooner, in exchange for part of the remaining interest.
What happens when
| Event | What happens |
|---|---|
| A borrower repays early | You receive all your interest ahead of maturity. The funds return to the source and are quoted again. |
| Your lend exits early | Someone purchases your lend position at your exit rate. The proceeds return to the source and are quoted again. |
| Your lend reaches maturity | Principal and interest return to the source and are quoted again. |
| No borrower takes your quote | Your funds stay in the source, earning the variable rate. |
Lend more, withdraw, or update your curve
- Lend more: deposits into the source are quoted right away. If you lend at a maturity your curve does not reach yet, the app offers to add it.
- Withdraw: take idle funds out of the source at any time, subject to its liquidity. Withdrawing everything turns passive quoting off.
- Update curve: new rates apply to new quotes and to your open lends' exit rates.
Cancel passive quoting
Cancel for one market or the whole source from its row on the Portfolio page:
- New quotes and early exits stop.
- Matched fixed lends keep earning until maturity, then you withdraw them as usual.
- Funds in the source keep earning the variable rate. When you cancel the whole source, you can also withdraw them in the same transaction.
Good to know
- Rates are fixed once matched. Curve changes never reprice a lend already made.
- Idle funds carry the source's rate and risk. The variable rate moves with the market. Open Term allocates to a single Morpho Blue market; a managed vault follows its curator. See Risks.
- Your curve can fill right away. Where your lend rate is at or below a resting borrow offer, it matches immediately at the borrower's rate. The app warns you when your curve crosses borrow offers.
- Quotes fill only from funds the source can release. While everything is lent, quoting waits for funds to come back. If the source is short of liquidity, quotes may not fill.