Introducing the YO Ecosystem Vault
Big news in the YOverse: The protocol now has its very own Ecosystem Vault.
The YO Ecosystem Vault is live on Morpho on Ethereum, curated by KPK. It turns yoUSD and yoUSD Edge into collateral, and that opens up a whole new set of ways to put your assets to work.
Lenders supply USDC and earn 9% APY, among the highest lending rates on Morpho today. YO depositors get a native way to loop yoUSD up to 7x (26% max ROE) or yoUSD Edge up to 4x (21% max ROE) in a single flow from the YO app. .
This launch marks a new paradigm for yoUSD & yoUSD Edge, with plenty of opportunity ahead.
What the Ecosystem Vault is
The YO Ecosystem Vault is the first YO-branded vault on Morpho. Curated by KPK, it supplies USDC to Morpho markets that accept yoUSD and yoUSD Edge as collateral, and nothing else.
Borrowers in those markets are YO depositors looping their own yield. Lenders earn what those borrowers pay. The curator moves liquidity between the yoUSD and yoUSD Edge markets to keep utilization and rates where both sides of the market work.
KPK has managed DeFi capital onchain since 2020 and now oversees around $241M across DAO treasury mandates and its own curated vaults. None of which has taken a loss since 2021.
For YO, KPK was a natural fit. Its automated agents rebalance capital toward the best available yield and pull liquidity out of a market within seconds when risk signals trip, with every agent restricted onchain to pre-approved markets and existing caps. Risk-adjusted yield within hard limits is what drives YO too, and the Ecosystem Vault is the first product of that shared approach.
Two collateral options, two loops
yoUSD is the conservative option. It allocates across a targeted set of blue-chip lending markets, published in full on the vault page. Its lower volatility as collateral is what supports leverage up to 7x.
yoUSD Edge is the higher-yield option. It draws from a wider set of fully onchain strategies, rated moderate risk by the YO Risk Graph. Its higher underlying yield makes each turn of the loop worth more, with leverage up to 4x.
Both vaults keep running exactly as before. Looping adds a layer on top for depositors who want more exposure to the same yield.
Follow a loop
The easiest way to understand looping is to watch one position get built. Using yoUSD Edge as an example:
- You deposit. You put USDC into yoUSD Edge and receive yoUSD Edge, a token whose value rises as the vault earns.
- Your yoUSD Edge becomes collateral. Use the YO app to post it to the yoUSD Edge market on Morpho.
- You borrow. The market lends you USDC against your collateral, supplied by the YO Ecosystem Vault.
- The USDC goes back in. The app deposits the borrowed USDC into yoUSD Edge, and the new yoUSD Edge joins your collateral.
- The app repeats it for you. Steps 2 through 4 run as a single flow until your position reaches the leverage you chose, up to 4x on Edge or 7x on yoUSD.
- Your position earns on its full size. You earn the vault's yield on everything deposited and pay the borrow rate only on what you borrowed. The gap between the two, multiplied by your leverage, is your return on equity.
- You earn boosted $YO Rewards. On top of multiplying your yield through looping, your entire position earns $YO Rewards as well in line with your chosen leverage. Up to 14% for yoUSD and 8% for yoUSD Edge.
- You unwind in one click. The app withdraws, repays the loan, and returns what remains to your wallet as USDC.
What to watch
Looping amplifies everything, including the downside. Borrow rates float with market utilization. Vault yields change with market conditions. If your collateral value falls far enough against your debt, the position can be liquidated at the market's LLTV threshold. The YO app shows your health factor and current rates before you confirm and for as long as the position is open.
What this means for you
If you lend USDC: deposit into the YO Ecosystem Vault on Morpho and earn 9% APY, lent against yoUSD and yoUSD Edge collateral in curated markets with transparent parameters.
If you hold yoUSD or yoUSD Edge: you can now loop it from the YO app without touching a single borrow-and-deposit transaction yourself.
If you build on YO: yoUSD and yoUSD Edge now have live Morpho markets behind them. Anything that composes with Morpho can compose with YO assets.
Find the YO Ecosystem Vault here.
About KPK:
KPK is a non-custodial onchain asset manager for DAOs, institutions, and retail users, actively managing capital across DeFi since 2020. Over $8bn deployed onchain, more than 12,000 transactions and zero funds lost.