Original title: Curators Explained
Original author: @MerlinEgalite
Compiled by: Peggy, BlockBeats

Editor's Note: As DeFi shifts from a high-yield-driven model to one of competition based on regulations and infrastructure, Morpho is attempting to reshape the organization of on-chain lending through its Vault and Curator mechanisms. This article, from a platform perspective, introduces the role of Curator and its non-custodial, programmatic operation logic.

The following is the original text:

What is a Curator?

Curator is a separate team or entity, not part of the official Morpho team, responsible for designing, deploying, and managing on-chain Vaults.

From a macro perspective, Curator's job is to package a diversified portfolio of products into user-friendly and easy-to-integrate Vault products.

Specifically, Morpho Vaults are essentially portfolios comprised of a group of overcollateralized lending positions. This structure allows users to: deposit funds through a single entry point; earn returns with a single click; and delegate ongoing risk management and portfolio construction to Curator.

In traditional finance, the closest role to a Vault Curator is that of an asset manager or fund manager. Both are responsible for developing strategies and managing risk, but there is a significant difference in their fundamental structure: a Vault Curator is non-custodial, and its execution is completed entirely automatically and transparently through smart contracts, rather than relying on human intermediaries.

In Morpho Vaults, Curators can never take over or manage user funds. What they do is programmatically configure the Vault to enforce predetermined policies.

Users can freely deposit or withdraw funds at any time without requiring anyone's approval, and there is no possibility of being deliberately prevented; the ownership and control of the assets always remain in the hands of the users themselves.

Curator's business model

Curators can be compensated through: management fees; performance fees.

The specific pricing structure is set by Curator and can be configured for different Vaults, but must comply with the preset maximum rate cap.

Some Curators choose lower rates; others rely on their historical performance or differentiated strategies to charge higher fees. These decisions are entirely up to the Curators and are unrelated to Morpho.

In addition, Curator can also partner with distributors (such as fintech companies or platforms) to distribute fees generated from certain deposits between Curator and the distributors through revenue sharing.

Although Curator's business model is similar in form to that of traditional asset managers, there is a key difference between the two: Vault's operating costs are far lower than those of traditional funds or asset management platforms.

Vault replaces the massive back-end systems of traditional asset management with just a few hundred lines of free, open-source code. The vast majority of processes are automated, and everything runs in real-time on the blockchain, eliminating the need to wait for quarterly reports.

Therefore, Curator is often able to charge lower fees than its traditional financial peers while maintaining a considerable profit margin.

How to evaluate a Curator (non-exhaustive list)

For businesses and organizations, the process of evaluating Curator should not be unfamiliar. It is similar to evaluating traditional asset managers, but with a significant advantage: complete transparency.

Vault is built on a public blockchain and uses various dashboard tools to view detailed data for any Curator or Vault in real time.

Here are some key evaluation dimensions:

Track Record

What work experience do you have in the DeFi field (and related traditional financial fields)?

Have you ever collaborated with well-known companies, fintech companies, or institutions?

How does its strategy perform in different market cycles, especially during stress testing phases?

How much money is currently managed across all Vaults?

While the size of funding itself cannot guarantee quality, it is often a useful signal of market trust and product fit.

Transparency & Methodology

Does the asset allocation method and risk control standard explain clearly?

Has an internal risk rating system been established?

Have you disclosed your response procedures in the event of market tightening or extreme events?

How are the roles and permissions divided among the various Vaults?

Does it follow strict operational security (OpSec) practices?

Does the company offer any form of insurance or risk mitigation mechanism?

Communication methods

Before depositing funds, you should pay attention to Curator's public channels, such as Twitter and the official website.

Do you maintain proactive communication during periods of high returns and periods of market volatility?

Do you regularly update Vault's performance, asset allocation changes, and risk events?

Conflicts of interest

Have any actual or potential conflicts of interest been clearly disclosed?

Are there any financial or governance relationships with certain agreements, investors, or counterparties that could influence allocation decisions?

As with traditional finance, responsible institutions should clearly explain the sources of conflict and how they manage it.

Through the above-mentioned assessment dimensions, institutions can choose Curator that matches their own needs in terms of strategy style, risk appetite, and information disclosure standards, while relying on the strong and tamper-proof systemic protection provided by Morpho's underlying infrastructure.

Note: The above list is not exhaustive. Some content applies to Morpho Vaults and its Curator, but may not apply to other platforms or Vault systems.

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