With all the talk about “illiquidity” in vaults, I thought this was a good time to remember what lending actually is. When you lend money onchain, that capital is being borrowed and used; it’s not just sitting idle waiting to be withdrawn at any time. When markets come under stress, people tend to de-risk, meaning many lenders try to withdraw all their funds at once, resulting in higher utilization and less liquidity, or in extreme circumstances, no short-term available liquidity. This isn't a bug. It's how lending pools naturally function under stress. To restore balance, the interest rate model automatically raises borrowing rates. The higher rates encourage borrowers to repay and/or attract new suppliers to deposit, bringing utilization back down and increasing available liquidity over time. For Morpho specifically, the target utilization is 90%, meaning that most of the time, 90% of deposited funds are borrowed. When it spikes to 100% (all funds are borrowed), the rate increases by 4x. The market rate then usually returns to equilibrium (around 90% utilization) within a few minutes in most cases, or a few hours during periods of significant market stress. I would also add that any illiquidity is isolated and contained to the given markets with an imbalance. The other day, only 3–4 out of 320 vaults on the Morpho App experienced temporary illiquidity while the rest operated normally. Claims of protocol-wide illiquidity are mispresented. In the end, illiquidity doesn’t mean losses or bad debt. It means a short-term imbalance where most funds are borrowed, while the market responds in real time, repricing risk and finding its equilibrium.