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🏦Earn Vaults & Borrow Markets

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Overview

Horizon Earn Vaults are the primary entry point for all lending capital within the protocol. They allow users to deposit supported assets into isolated lending markets and earn real yield generated directly from borrower interest.

The system is built on Morpho’s peer-to-peer lending infrastructure, enabling optimized rate matching, improved capital efficiency, and real yield accrual.

For each deposited asset, the protocol issues a corresponding yield-bearing ERC-20 token (“hToken”) that represents a proportional claim on the underlying vault liquidity.

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Vault Architecture

Each Earn Vault corresponds to a single deposit asset and supports a set of collateral and borrow markets operating within loan to value limits. New vaults may be introduced subject to risk evaluation.

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Supported Vaults and Markets

The following markets are provided for illustrative purposes only.

Vault (Deposit Asset)

Target Markets (Collateral / Loan Asset)

Loan to Value

Ethereum Vault (hWETH)

WSTETH / WETH USDx / WETH WBTC / WETH

90% 90% 90%

USDC Vault (hUSDC)

WBTC / USDC WETH / USDC TitanX / USDC DragonX / USDC ORX / USDC Auryn / USDC Horizon / USDC Blaze / USDC Inferno / USDC NOVA / USDC ASCEND / USDC

90% 90% 85% 85% 75% 75% 75% 40% 40% 40% 40%

USDT Vault (hUSDT)

WBTC / USDT WETH / USDT TitanX / USDT DragonX / USDT ORX/ USDT Auryn / USDT Horizon / USDT Blaze / USDT Inferno / USDT NOVA / USDT ASCEND / USDT

90% 90% 85% 85% 75% 75% 75% 40% 40% 40% 40%

USDx Vault (hUSDx)

WBTC / USDx WETH / USDx TitanX / USDx DragonX / USDx ORX / USDx Auryn / USDx Horizon / USDx Blaze / USDx Inferno / USDx NOVA / USDx ASCEND / USDx

90% 90% 85% 85% 75% 75% 75% 40% 40% 40% 40%

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Deposit Lifecycle

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Asset Supply

When a user deposits an asset (e.g. USDx) into its corresponding Earn Vault, the asset is supplied to the lending market and becomes available for borrowing under the defined risk parameters.

The depositor is considered a lender within the system.

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hToken Minting

Upon deposit, the protocol mints a non-rebasing ERC-20 token (“hToken”) to the depositor (e.g. hUSDx).

  • hTokens represent a proportional claim on the vault’s total assets.

  • hTokens do not increase in balance.

  • Instead, each hToken appreciates in value over time as interest accrues.

This design enables full composability across DeFi while maintaining precise accounting of accrued yield.

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Yield Generation

Yield is generated exclusively from borrower interest and is optimized through Morpho’s P2P matching engine:

  • Liquidity is first matched directly with borrowers at the best available rate.

  • Unmatched liquidity is routed to fallback pools to continue earning yield.

  • Interest accrues continuously and is reflected in the increasing exchange rate between hTokens and the underlying asset.

Horizon applies a global 20% performance fee on borrower interest. The protocol does not charge deposit or withdrawal fees. All performance fees are routed to the universal buy & burn.

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Withdrawal Mechanics

Users may redeem hTokens for the underlying asset plus accrued interest at any time.

Withdrawals are subject to:

  • Available vault liquidity

  • Current market utilization

During periods of high utilization, withdrawals may be temporarily limited due to active borrowing within the market.

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Design Principles

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Non-Rebasing Yield Tokens

hTokens accrue value via an increasing exchange rate, avoiding balance rebasing and ensuring compatibility with external protocols.

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Peer-to-Peer Optimization

Morpho’s matching engine improves rates for both lenders and borrowers by reducing reliance on pooled liquidity where possible.

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Capital Efficiency

All supplied capital remains productive, whether matched peer-to-peer or deployed in fallback pools.

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Real Yield

No inflationary emissions are required for base yield generation. All interest originates from borrower demand.

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Full Composability

hTokens are standard ERC-20 assets and may be used in other DeFi protocols as collateral, liquidity, or yield-bearing primitives.

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Incentives & Emissions

In addition to borrower interest, eligible hToken holders may receive rewards from the NOVA Emission Pool, subject to vault-specific weight parameters.

These incentives are designed to:

  • Encourage long-term liquidity provision

  • Support early market formation

  • Complement, not replace, real yield

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Summary

Horizon Earn Vaults provide a predictable, capital-efficient lending layer built on Morpho’s infrastructure, offering:

  • Real yield from borrower interest

  • Non-rebasing, composable yield tokens

  • Optimized peer-to-peer rates

  • Integrated buy & burn value capture

  • Optional protocol incentives via NOVA

This architecture aligns lenders, borrowers, and the Horizon ecosystem around sustainable, usage-driven growth.

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