Ondo Finance Gets FINRA Green Light for Tokenized Stocks : Can ONDO Break $0.42?. Ondo’s Oasis Pro Markets secured expanded FINRA authorization for U.S. tokenized stocks and funds. Explore the regulatory impact
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quote: Some of the (many) flaws of the current vault design. | Who is touching your Morpho position?
A nameless bot is touching it.
It is not a multisig. It is not a DAO. It is not under a timelock. It is a bare EOA.
Despite claims of vault transparency, a key piece of vault infrastructure is shroud in secrecy. The reallocation bots and strategies employed by curators to rebalance vaults work from the shadows but hold sway over the fates of depositors and borrowers alike.
Steakhouse's 0xfeed bots are an illustrative example. Reallocate transactions are routed through off-chain infrastructure, pushing custom call data through a bespoke set of contracts and delegated wallets.
There is no smart contract enforcement here. There are no published target weights. No available allocation policy. No rule a borrower could read and plan around. The vault can enforce some guardrails, but the bots are steering.
This means volatile and difficult variable rates. Borrowers described it as "carnivorous on carnivorous violence" as they fought to loop the minimal liquidity available when bots moved none of the available idle market capital in.
Lenders should also ask questions about the reallocation strategies. In the wake of the USR exploit we documented how Gauntlet's reallocation bots moved supplier money in to a bad market, resulting in 7 figures of avoidable losses.
Morpho's V2 vault architecture makes permissioned reallocation a requirement. Liquidity by default flows in to a single market and a curator then needs to move it to support liquidity in other markets in the vault.
So far no curator has opened the kimono on their reallocation infrastructure. We hope discussion on the strategies and goals of reallocation bots shines new light on the shadowy curator backends that have such control of both sides of the vault markets.
For now, we encourage you, dear reader, to always look at who is touching your positions.