Privy x Morpho: DeFi Lending Recipe

A developer recipe for building Earn and Borrow products using Privy embedded wallets and Morpho lending markets. Clone, configure, ship.

Disclaimer

This is an educational demonstration showcasing integration patterns between Privy and Morpho. It is functional but intended for learning purposes. Do not use in production without security audits, testing, and risk assessment.

• Always exercise caution when interacting with real smart contracts and funds
• Always use minimal amounts
• Never Hardcode any private keys
• Consider professional security audits for production applications

Overview

This recipe demonstrates how to build a one-click DeFi lending application combining:

• Privy — Embedded wallet infrastructure for seamless user onboarding
• Morpho — Hyper-efficient lending markets and vault yield optimization
• Multi-chain — Supports Ethereum, Base, Arbitrum, Polygon, Optimism, and more

Earn Product

Browse and deposit into Morpho vaults across chains. Real-time APY, TVL, and position tracking with value transitions on deposit/withdraw.

Borrow Product

Browse top 50 markets, supply collateral, borrow assets. Full position simulation with LTV, health factor, liquidation price, and review step before execution.

Key Features

• Privy wallet authentication (social login, email, or external wallet)
• Multi-vault and multi-market support via Morpho's GraphQL API
• Real-time position simulation with before/after projections
• Input validation with clear disabled reasons
• Review step before wallet execution
• Responsive split-view UI (table + action panel)

Prerequisites

• Node.js 20+ and yarn
• Privy App ID from the Privy Dashboard
• Basic DeFi knowledge (ERC-20 tokens, lending markets, vaults)

Getting Started

git clone https://github.com/morpho-org/privy-morpho-recipe.git
cd privy-morpho-recipe
yarn install

Create .env.local:

NEXT_PUBLIC_PRIVY_APP_ID=your_privy_app_id

Run the development server:

yarn dev

Architecture

Core Components

Component	Purpose
MarketOperationsModal	Borrow/repay panel with simulation, validation, and review step
VaultOperationsModal	Deposit/withdraw panel with value transitions and review step
MarketTable	Top 50 markets by size with rate, utilization, and liquidity
VaultTable	Top 20 vaults by TVL with APY breakdown and curator info
SimulationSummary	Before/after position projections (collateral, debt, LTV, HF)
ReviewStep	Inline transaction review before wallet execution

Hooks

Hook	Purpose
useMarketPosition	Borrow position state, simulation, validation, transaction handlers
useVaultPosition	Vault deposit/withdraw state, slippage detection, safety checks
useMarkets / useVaults	GraphQL data fetching and market/vault selection
useSmartAccount	Privy wallet integration for transaction signing
useTxLifecycle	Transaction state machine (processing, success, error)

Data Flow

Morpho GraphQL API → Apollo Client → useMarkets/useVaults hooks
                                         ↓
User selects market/vault → useMarketPosition/useVaultPosition hooks
                                         ↓
On-chain reads (viem) → Position, oracle price, market data
                                         ↓
Simulation engine → Projected LTV, HF, liquidation price
                                         ↓
Validation engine → CTA state, disabled reasons
                                         ↓
Review step → Wallet execution via Privy

Libraries

Library	Purpose
@privy-io/react-auth	Wallet authentication and embedded wallets
@morpho-org/blue-sdk-viem	Morpho contract ABIs and types
@apollo/client	GraphQL data fetching from Morpho API
wagmi + viem	Blockchain interactions and contract calls
framer-motion	UI animations

Extending This Recipe

Adding a New Chain

The app already supports multiple chains. To add a new Morpho deployment:

1. Add the chain to CHAIN_ID_MAP in src/context/ChainContext.tsx
2. Add the chain config to wagmiConfig in src/app/providers.tsx
3. The GraphQL API will automatically include markets/vaults on the new chain

Optional Features (Not Yet Implemented)

• Gas Sponsorship — Privy paymaster integration for gasless transactions
• Health Monitoring — Server-side position monitoring with Privy server wallets
• Batch - Using smart wallet and batching transactions

Security Considerations

• Morpho vaults and markets are subject to smart contract risks
• ERC-20 approvals are scoped to the specific transaction amount
• Input validation prevents unsafe positions (LTV checks, balance checks)
• Health factor simulation warns before liquidation-risk actions
• Always test with small amounts first

Resources

• Privy Documentation
• Morpho Documentation
• Morpho GraphQL API
• Morpho App

License

MIT License — see LICENSE for details.

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Built to demonstrate the power of Privy x Morpho integration.