Morpho vaults are a way for people to earn passive income in crypto without having to manage complicated lending positions on their own. They have become increasingly popular, especially as prices have corrected and crypto users are looking for safe ways to earn money without holding a bleeding coin. Whether you're new to these Morpho Vaults, or just looking to learn more, here's a quick breakdown of what they are, how to use them, and which are currently providing you the best passive returns. You can bookmark this link on Santiment to track APY returns for (currently) 19 different vaults!

If you want to try Morpho vaults safely, it helps to follow a simple caution checklist. First, understand that DeFi always has risks, including smart-contract bugs, market fluctuations, and liquidity issues. Only use official links or trusted apps when interacting with any Morpho product. Next, research the vault you’re considering: look at who the curator is, what assets it handles, what risk notes are listed, and how its APY has behaved over time. Lastly, be aware that stressful events, such as a stablecoin depegging, can still affect vault performance, even if the strategy is well-designed. For trust-ability, it may also help to keep an eye on which vaults are providing the highest 'assets supplied'.

It's also worth noting that there are third party risk ratings like Credora available, to help users navigate different vaults to assess how safe or risky a vault's underlying lending position may be. Morpho vaults are curated strategies, but they still depend on the health of the markets they allocate to, such as stablecoin liquidity, collateral types, borrower strength, and liquidation behavior.

A risk rating acts like a “credit score” for a vault or a market. It helps users understand the chance of something going wrong, such as a collateral asset losing value, a borrower becoming insolvent, or a lending market becoming unstable. Morpho itself doesn’t assign these scores. Instead, outside companies provide independent assessments so curators and users can see risks that may not be obvious from the APY alone.

Credora is one of several companies that specialize in data-driven risk analytics DeFi lending. Other credible risk-rating providers include:

• Gauntlet - One of the most widely trusted modeling firms in crypto. Runs simulations for Aave, Uniswap, Maker, and others.
• Chaos Labs - Works with platforms like Aave, GMX, and others. Known for real-time monitoring, modeling, and on-chain risk alerts.
• Moody’s Digital Assets - More institutional. Focuses on stablecoin health, asset quality, and systemic factors.
• RiskDAO - Community-driven DeFi risk research. Publishes vault-specific and protocol-specific risk reports
• DeFiSafety - Scores protocols based on process quality, documentation, audits, and operational transparency

With all of this said, how can you use Morpho vaults? Well, when you deposit a token like USDC or ETH into a Morpho vault, a smart contract handles everything behind the scenes. Each vault follows a strategy created by a “curator,” which is usually a team or organization that studies risks and decides how the vault’s funds should be used. This lets regular users benefit from DeFi lending yields without choosing lending markets themselves.

Inside the vault, your deposit may be spread across several lending opportunities that run on Morpho’s underlying system. Every vault has its own goals and risk levels. Some focus on safer, steady returns from stable assets, while others aim for higher yield by taking on more risk. The curator decides which markets are allowed, how much exposure the vault can take, and when to shift funds if market conditions change. Because anyone can technically create a vault, it’s important for users to check who is running it and whether their strategy and track record make sense.

The main number people look at when comparing vaults is APY, which means annual percentage yield. APY represents the estimated yearly return if current market conditions stayed the same and the rewards kept compounding. A Morpho vault’s APY usually comes from two places: the base yield earned from lending, and any extra incentives from the platforms the vault interacts with. APY can go up or down based on interest rates, demand, and reward programs. It is not a fixed guarantee; it is simply the vault’s best estimate of what you might earn over a year.

So what exactly are the best and worst performing APY's at this current time? Let's take a look. Remember that these APY's are always subject to change, and don't reflect the superiority (or inferiority) of one over another.

Best Performing APY Vaults:

1) Spark dai vault: v1: 7.67% APY

2) Usual boosted usdc:v1: 7.15% APY

3) Gauntlet weth core:v1: 4.6% APY

Worst Performing APY Vaults:

1) Re7 wbtc:v1: 0.1% APY

2) Mev capital wbtc:v1: 0.12% APY

3) Gauntlet wbtc core:v1: 0.10% APY

Morpho’s vaults first became available in late 2023, when the project introduced its earliest version of permissionless, curated lending vaults. In early 2024 and through 2025, Morpho continued updating and improving them, eventually launching a newer version that gave curators even more flexibility in how they allocate funds. What makes Morpho vaults stand out from other passive income options in crypto is their transparency, non-custodial design, and the way curators must openly define their strategies on-chain. Instead of hiding the risks, Morpho vaults show you exactly how funds are being used.

Once you feel ready, the actual process of depositing into a vault is straightforward. You connect your crypto wallet, choose which vault you want, and approve the token you plan to deposit. After you complete the transaction, you receive vault “shares,” which represent your portion of the vault. From that point on, the vault automatically manages your funds according to the curator’s strategy. You can view your returns, watch how the APY changes, and withdraw at any time by redeeming your shares. A smart approach is to start with a small test deposit, make sure everything works as expected, and then add more if you decide the vault fits your risk level.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.