Liquidation Rate Morpho vs Industry - 2024
January 28th, 2025

During 2024 the average liquidation rate for Morpho was 6.4% which makes it the lending protocol with the second highest liquidation rate after Compound.
In the chart below, the liquidation rate is calculated at facility level.
Notably, Morpho's observed liquidation rate is nearly double that of AAVE, the largest lending protocol. This higher rate is attributed to the credit risk profile of its users, which leans toward higher risk.
In the event of liquidation, customers lose collateral. Ideally, liquidation events should be minimized through measures like implementing a credit score system at the point of loan origination. For more details, see the post on Morpho Credit Risk.
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