Roughly $18 million in depositor funds are stuck in a Morpho Blue vault with no clear exit, after the msY token issued by Main St Finance collapsed by as much as 85% on June 20.
The AlphaUSDC Delta V2 vault, managed by a curator called AlphaPing, had concentrated its exposure in the msY/USDC market. That market is now at 100% utilization, which in plain English means: every dollar that could be borrowed has been borrowed, and there’s nothing left for depositors trying to withdraw.
What happened inside the vault
The AlphaUSDC Delta V2 vault was pitched as a delta-neutral USDC strategy. The idea was to generate yield on stablecoins without taking directional risk. In practice, the vault ended up heavily concentrated in a single market tied to the msY token. When msY cratered between 70% and 85%, the collateral backing loans in that market became effectively worthless. Borrowers have no incentive to repay, and depositors can’t pull their funds because there’s no liquidity left in the pool.
The AlphaPing factor
