Morpho launches in-kind redemptions, allowing vault users to exit into underlying positions when vault liquidity is constrained.
DeFi & Yields ·
Morpho has introduced in-kind redemptions, enabling vault users to exit their positions into the underlying market assets even when the vault itself lacks available liquidity. This feature addresses a constraint for depositors seeking to withdraw from Morpho's yield-aggregating vaults during periods of reduced vault liquidity.
The mechanism works within Morpho's architecture of isolated credit markets layered beneath MetaMorpho vaults. Vault curators allocate deposits across individual lending markets, each with distinct collateral, loan assets, and risk parameters. By allowing redemptions directly into these underlying positions rather than requiring cash settlement, the protocol reduces friction and expands exit optionality for users without forcing vault managers to liquidate positions.
The implementation details—including which vault types support in-kind redemptions, any conversion mechanics or slippage considerations, and whether all curators must enable the feature—remain unspecified in available announcements.