According to Odaily Planet Daily, Morpho co-founder Merlin Egalite responded to concerns about "insufficient liquidity" in some lending pools, stating, "When the market is under pressure, people tend to reduce risk. This means many lenders will try to withdraw all their funds simultaneously, leading to increased capital utilization and decreased liquidity. In extreme cases, there may even be a situation where no liquidity is available in the short term. This is not a systemic flaw, but rather a natural reaction mechanism of the lending pool under pressure. To restore balance, the interest rate model will automatically adjust the borrowing rate."

For example, Morpho targets a 90% utilization rate, meaning that in most cases, approximately 90% of deposited funds are lent out. When utilization spikes to 100%, interest rates increase fourfold. In most cases, market rates typically return to equilibrium (around 90% utilization) within minutes, but during periods of high market stress, recovery can take several hours.

Furthermore, the so-called "liquidity shortage" is localized and manageable, occurring only in isolated market imbalances. A few days ago, only 3-4 of Morpho's 320 liquidity pools experienced temporary liquidity shortages, while the rest operated normally. Therefore, claims of a "liquidity crunch across the entire protocol" are misleading. A liquidity shortage does not equate to losses or bad debts. It simply means that a large amount of funds has been lent out in the short term, and the market reacts in real time, repricing risk and finding a new equilibrium.