Guardians V2: Strengthening governance in Morpho Vaults V2

Aragon Marketing -

Morpho Vaults V2 set a new standard for onchain asset curation. Alongside it, depositor oversight is upgrading too. Together with Morpho, we’ve built Guardians V2, a new system that makes it easier for vault depositors to exercise their onchain veto power, powered by Aragon’s LockToVote plugin.

Oversight for the next generation of vaults

Vaults V2 introduce a more flexible role system and advanced allocator architecture, unlocking sophisticated new strategies for curators. With this added flexibility, depositors now gain a stronger safeguard: Guardians V2.

Guardians act as an additional layer of oversight, allowing depositors to veto curator actions if they believe those actions introduce unwanted risk. This ensures that the vault’s community always has a direct, onchain voice.

The challenge: governing with non-governance ERC20 tokens

Vaults V2 introduced a more modular role system (Owners, Curators, Allocators, and Sentinels) each with specific powers. This separation gives curators and allocators more flexibility to design differentiated strategies.

But flexibility also creates risk. Without an effective way for depositors to participate, the community would have no safeguard if curators attempted to make changes depositors disagreed with.

The obstacle: most ERC20 tokens are not built for governance, and that's by design. If Morpho were to have added voting logic to the vault tokens themselves, it would raise gas costs on every transaction. This means holders of vault shares, LP tokens, or staking derivatives often can’t participate directly in decision-making without taking extra steps. Even though their capital underpins the system, they’re left without an elegant way to exercise oversight.

The existing approach required users to wrap their tokens into a governance-compatible token contract ahead of time, preventing them from being able to be used across DeFi and fragmenting the holder base.

For Vaults V2, closing this gap ensures depositors can actively participate in oversight, complementing existing protections like role separation and timelocks, while keeping their tokens fully liquid.

The solution: Lock-To-Vote

To power Guardians V2, we developed LockToVote, a new Aragon plugin that enables any ERC20 token to be used in onchain governance, even if it wasn’t designed for that purpose.

Designing for onchain governance must always include a solution for double voting, where someone votes, transfers tokens, and then votes again from another address. Most frameworks solve this with snapshots (IVotes) or the above-described wrapper approach, which either adds permanent gas overhead or removes the token’s liquidity.

LockToVote takes a different approach. It allows holders to lock tokens only at the moment of participation, keeping them liquid for DeFi use until a critical proposal requires their participation.

Here’s how it works in practice:

  1. Lock: Approve and deposit tokens into a LockManager contract, instantly turning that balance into voting power.
  2. Vote: Cast a vote with the locked balance. While locked, tokens are non-transferable, preventing double voting. Locking and voting can also be combined into a single transaction.
  3. Add power: Lock more tokens at any time to increase voting weight.
  4. Unlock: Release tokens at any time, instantly regaining full liquidity and resetting voting power to zero. (Projects may also disable early unlocks, requiring holders to wait until proposals they’ve voted on have ended.)

This structure enables governance on demand with tokens staying liquid until the exact moment they’re needed. No gas-heavy token requirements, no wrappers, and no redeploys.

What this unlocks for depositors

For Morpho Vault users, Guardians V2 unlocks a new level of direct, practical oversight:

  • Onchain veto power: Shareholders can challenge or block curator actions in real time, anchoring Vault governance in user consent.
  • Frictionless participation: Tokens remain liquid for trading, collateral, or yield strategies up until a governance decision is at stake.
  • Future-proof governance: As Morpho expands Vaults V2 to cover new strategies and risk frameworks, oversight scales seamlessly without needing new token standards.

Beyond Morpho, the design is intentionally extensible:

  • Protocols with non-governance ERC20s can adapt the same mechanism to layer oversight onto existing tokens.
  • The plugin’s modular structure means teams can add new voting logic, thresholds, or access controls without rewriting core contracts.

Guardians V2 were developed together with Morpho for Vaults V2, where they’re live today. While built for this system, the underlying plugin is extensible by design. For protocols facing similar challenges with non-governance ERC20 tokens, our team can adapt the solution.

Looking ahead

Vaults V2 expand the possibilities for onchain asset curation. With Guardians V2, depositors gain an equally powerful system of oversight: simple to use, trustless by design, and aligned with DeFi’s ethos of self-custody.

We’re proud to have built this layer of protection for Morpho, and look forward to seeing it strengthen the vault ecosystem.

Guardians V2 are live now in Morpho Vaults V2.

Explore Vaults with Morpho, or reach out to the team to understand how we can build similar solutiions for your project.