Morpho's Non-Custodial Vault Definition Criticized by Aave Founder

Aave founder Stani Kulechov has expressed concerns over Morpho's proposed definition of non-custodial DeFi vaults. According to Kulechov, users may still face changes to how their funds are allocated under this model, despite the presence of timelocks and exit periods.

The concern centers around the powers given to vault curators, who can potentially expand allocations beyond the strategy initially agreed upon by users. Kulechov also questioned whether users have enough visibility into these decisions, suggesting that relying on implied approval could leave liquidity providers with limited control over their funds.

Morpho has proposed dividing vaults into non-custodial and discretionary categories, with its non-custodial model relying on smart-contract rules, timelocks, and exit periods. However, Kulechov argued that a genuinely non-custodial vault should not have managers at all, pointing to simple lending wrappers and early Yearn vaults as examples.

The debate follows concerns over DeFi risk and the growing interest in on-chain capital allocation from institutions. Morpho's proposal also argues that vault classifications should reflect how vaults actually operate rather than their labels.