the protocol team has reviewed the morpho v2 vaults and determined they are not a great fit for the yield protocols.
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Per-vault pausable issuance gates — distinct from a full-protocol pause; transfers stay open, so auctions could clear at terrible secondary-market prices precisely when you’d want to sell during a collateral default.
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Curator-flippable management fees — curators can turn fees on at any time. Only 1 of 8 vaults has it on today; flipping it on any of the other 7 drops ref-per-tok and triggers an immediate nuisance default, causing the protocol to go into unnecessary re-collat auctions
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Reward yield doesn’t stream through exchange rate — yield is claimable, not embedded. Worse, several reward tokens (notably MORPHO itself) have no on-chain oracle, so you can’t even materialize the yield by trading it out. i think this is only relevant for 2 of the vaults, so for those 2 you need to essentially discount the morpho part of the yield unless they get an oracle
(2) is the major issue here, essentially making defaults unpredictable and unavoidable to some degree. (1) technically exists in other protocol integrations like aave, but the per-vault mechanic causes increased risk. (3) is a yield issue