In a pooled lending protocol, the risk parameters — which collateral is accepted, at what loan-to-value, with which oracle — are set by governance and easy to overlook. Morpho makes them explicit per market and assigns responsibility for allocating between markets to a named curator.
What the depositor is choosing
When you deposit into a Morpho vault, you are choosing a curator's risk appetite. A conservative curator allocates to markets backed by blue-chip collateral at modest LTVs; an aggressive one reaches for yield in markets backed by long-tail assets. Both are visible on-chain — the markets, the caps, the oracles — which is more transparency than any pooled lending protocol offers.
What has gone wrong
Some curators have accepted collateral that subsequently lost value or liquidity, producing bad debt in specific vaults. The protocol worked exactly as designed; the allocation judgement was poor. That is the risk you are underwriting, and it is a different one from smart contract risk.
The immutable base
Morpho Blue's core is immutable: market parameters are fixed at creation and no governance can alter them afterwards. That removes an entire category of risk present in upgradeable lending protocols.
Who should use it
Depositors who will read which markets a vault allocates to and form a view on the curator. Anyone who wants a single conservative decision made for them should use Aave, where risk parameters are set through a public governance process with professional risk analysis.