Settlement

When a Fixed Token matures, the protocol records the settlement exchange rate between the Loan Token (e.g., Morpho-USDC) and the Underlying Loan Token (e.g., USDC). For instance, if the exchange rate is 1.05 and a borrower has a 1000 Fixed-USDC position, the borrower will need to repay 952.4 Loan Tokens (1000 USDC / 1.05), equivalent to 1000 USDC.

Lender Settlement

Lenders automatically start accruing the money market variable rate at maturity as soon as the settlement exchange rate is recorded.

Borrower Settlement

Borrowers that have not rolled forward or repaid their debts at maturity start paying the reference Morpho money market variable interest rate on their loan. Any third party can flash settle a borrower's account back to the Morpho money market if that action is required in order to facilitate lender redemptions. If the reference money market is illiquid such that a borrower's account can't be flash swapped, settlers will need to wait for the reference money market to become liquid again.