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Lend Vault to Midnight

LendVaultToMidnightCallback moves a lender's position from an ERC-4626 compliant vault into a fixed-rate position on Morpho Midnight in a single take.

Description​

The lender holds shares in an ERC-4626 vault (typically a Morpho Vault-V2). They post a buy (lend) offer on Midnight with this callback set as the offer's callback. When the offer is taken, the callback redeems enough vault shares to fund the fixed-rate lend offer on Midnight.

This is the onchain mechanism behind Earn while you wait: the lender's idle funds sit in a variable-rate vault until a borrower fills their fixed-rate lend offer. For Earn while you wait on Tenor, the vault is typically an immutable, unmanaged Morpho Vault-V2 that allocates into a Morpho Blue market with the same parameters as the Morpho Midnight target market (same collateral, oracle, and LLTV).

Why an ERC-4626 vault, not Morpho Blue directly?​

The simplest source is a Morpho Vault-V2 that allocates 1:1 into a single Morpho Blue market: an unmanaged, immutable vault that mirrors one variable-rate market. That is what Earn while you wait uses.

Sourcing from an ERC-4626 vault rather than a Morpho Blue market directly also keeps the callback generic: the same path supports the Money Market product, curated/managed vaults, and any third-party ERC-4626 strategy whose asset() matches the Midnight market's loan token.

Step-by-step callback execution​

Before any take, the lender posts a buy (lend) offer on the Midnight target market with this callback set as the offer's callback. The offer carries the callback wiring; the take triggers it.

LendVaultToMidnightCallback flow: a taker calls take() on the Midnight market, which invokes onBuy on the callback; the callback redeems vault shares to loan tokens and approves them to Morpho Midnight to settle the new lend.
  1. Take: A taker fills the lender's buy (lend) offer on the Midnight target market by calling MORPHO_MIDNIGHT.take(). Morpho Midnight invokes onBuy on the callback.
  2. Validate: The vault's asset() must be the Midnight market's loanToken.
  3. Compute the fee: The fee is derived from the offer tick using CallbackLib.buyerFeeFromTick. It is an effective-price fee applied to the interest portion only. Zero when no fee is configured.
  4. Withdraw from the vault: The callback calls IERC4626.withdraw(buyerAssets + fee, address(this), buyer), which pulls vault shares from the lender and produces loan tokens on the callback.
  5. Settle: If the fee is non-zero, it is transferred to the recipient. buyerAssets is approved back to Morpho Midnight so it can settle the new lend.

Example​

A lender holds vUSDC shares in USDC Vault-V2 worth 10,000 USDC, earning the vault's variable rate while they wait. They want to lock in a fixed rate on cbBTC/USDC · 30d when a borrower shows up.

  1. The lender posts a buy (lend) offer for 10,000 USDC on cbBTC/USDC · 30d at 2%, with LendVaultToMidnightCallback set as the offer's callback.
  2. A borrower takes the offer. Midnight invokes onBuy on the callback.
  3. The callback confirms USDC Vault-V2's asset() is USDC, the market's loanToken.
  4. It calls withdraw(10,000 USDC + fee, ...) on the vault, which burns the lender's vUSDC shares and produces 10,000 USDC on the callback.
  5. It approves the 10,000 USDC back to Midnight to settle the new lend.

The lender ends the take holding fewer (or zero) vUSDC shares and a 10,000 USDC fixed-rate lend position on cbBTC/USDC · 30d. This is the Earn while you wait flow.

Prerequisites​

  • The lender must grant an ERC-20 allowance on the vault's share token to this callback. The vault's withdraw call pulls shares from the lender via that allowance.
  • The buy (lend) offer's callback field must point at this callback so that onBuy lands here on fill (buy offers carry no receiver; the ratifier requires receiverIfMakerIsSeller to be zero).
Allowance is on vault shares

The required allowance is on the vault's share token, not on the underlying loan token. A loan-token allowance is not sufficient and the migration will revert at withdraw.