Use Turnkey wallets with Morpho

Overview

Morpho Vaults are smart contracts that allow users to deposit assets into yield-generating vaults built on top of Morpho’s lending protocol.

We’ll walk through the steps of using Turnkey to sign some common transactions to Morpho’s Steakhouse USDC Vault on Base Mainnet. The flow is also going to show Turnkey’s policy engine in action by restricting the signing operations only to the specific Morpho contracts. The working example can be found here.

Getting started

The first step is to set up your Turnkey organization and account. By following the Quickstart guide, you should have:

• A root user with a public/private API key pair within the Turnkey parent organization
• An organization ID

The next step is to create another user within the organization with a different API key and remove it from the root quorum. You can do this from the Turnkey dashboard or API. Here’s a simple script that shows how to update the root quorum using @turnkey/sdk-server.

Finally, make sure you have a wallet with an Ethereum account created within this organization and have it funded with some ETH and USDC on Base Mainnet.

Setting up the policy for the non-root user

Now, we want to use the non-root user for signing transactions to Morpho and restrict it to only be able to interact with the USDC and Morpho vault smart contracts. We’ll define a new API client that would use the organization root user to create the required policy:

const turnkeyClient = new Turnkey({
    apiBaseUrl: "https://api.turnkey.com",
    apiPrivateKey: process.env.TURNKEY_API_PRIVATE_KEY!,
    apiPublicKey: process.env.TURNKEY_API_PUBLIC_KEY!,
    defaultOrganizationId: process.env.TURNKEY_ORGANIZATION_ID!,
}).apiClient();

const userId = '<The id of the non-root user that you'll be using to sign the Morpho related transactions>';

const MORPHO_VAULT_ADDRESS = 0xbeeF010f9cb27031ad51e3333f9aF9C6B1228183;
const USDC_ADDRESS = 0x833589fCD6eDb6E08f4c7C32D4f71b54bdA02913;

const policyName = "Allow API key user to only call the MORPHO_VAULT_ADDRESS and USDC_ADDRESS";
const effect = "EFFECT_ALLOW";
const consensus = `approvers.any(user, user.id == '${userId}')`;
const condition = `eth.tx.to in ['USDC_ADDRESS', 'MORPHO_VAULT_ADDRESS']`;
const notes = "";

const { policyId } = await turnkeyClient.createPolicy({
    policyName,
    condition,
    consensus,
    effect,
    notes,
});

Set up the Turnkey signer

We’ll be using @turnkey/viem to create a Turnkey custom signer which implements the signing APIs expected by the viem client. Notice that the Turnkey API client is going to use the non-root user API key now as using a root user will bypass the policy engine evaluation.

import { base } from "viem/chains";
import { createAccount } from "@turnkey/viem";
import { Turnkey as TurnkeyServerSDK } from "@turnkey/sdk-server";
import {
    createWalletClient,
    http,
    type Account,
    erc20Abi,
    createPublicClient,
    parseAbi,
    parseUnits,
} from "viem";

 const turnkeyClient = new TurnkeyServerSDK({
    apiBaseUrl: process.env.TURNKEY_BASE_URL!,
    apiPrivateKey: process.env.NONROOT_API_PRIVATE_KEY!,
    apiPublicKey: process.env.NONROOT_API_PUBLIC_KEY!,
    defaultOrganizationId: process.env.TURNKEY_ORGANIZATION_ID!,
});

const turnkeyAccount = await createAccount({
    client: turnkeyClient.apiClient(),
    organizationId: process.env.TURNKEY_ORGANIZATION_ID!,
    signWith: process.env.SIGN_WITH!,
});

const client = createWalletClient({
    account: turnkeyAccount as Account,
    chain: base,
    transport: http(
      `https://base-mainnet.infura.io/v3/${process.env.INFURA_API_KEY!}`,
    ),
});

// Use the standard viem client for non-signing operations
const publicClient = createPublicClient({
    transport: http(
      `https://base-mainnet.infura.io/v3/${process.env.INFURA_API_KEY!}`,
    ),
    chain: base,
});

Approve the vault to spend USDC and deposit USDC into the vault

 // Approve the vault to spend for 10 USDC, use maxUint256 if you want the max token approval
const { request: approveReq } = await publicClient.simulateContract({
    abi: erc20Abi,
    address: USDC_ADDRESS as `0x${string}`,
    functionName: "approve",
    chain: base,
    args: [MORPHO_VAULT_ADDRESS as `0x${string}`, parseUnits("10", 6)],
    account: client.account,
});

const approveHash = await client.writeContract(approveReq);

console.log("Approve transaction:", `https://basescan.org/tx/${approveHash}`);

// Deposit USDC into vault
const vaultAbi = parseAbi([
    "function deposit(uint256 assets, address receiver) external returns (uint256 shares)",
]);

const { request: depositReq } = await publicClient.simulateContract({
    abi: vaultAbi,
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    functionName: "deposit",
    args: [parseUnits("0.5", 6), (turnkeyAccount as Account).address],
    account: turnkeyAccount as Account,
});
const depositHash = await client.writeContract(depositReq);

console.log("Deposit transaction:", `https://basescan.org/tx/${depositHash}`);

Check user share balance and vault data

In order to see how much the user can withdraw we can call the balanceOf function if the Vault contract.

 const balanceAbi = parseAbi([
    "function balanceOf(address account) external view returns (uint256)",
    "function decimals() external view returns (uint8)",
]);

const decimals = await publicClient.readContract({
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    abi: balanceAbi,
    functionName: "decimals",
});

const rawBalance = await publicClient.readContract({
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    abi: balanceAbi,
    functionName: "balanceOf",
    args: [turnkeyAccount.address],
});

// Format to human-readable
const readableBalance = formatUnits(rawBalance, decimals);
console.log(`User vault balance: ${readableBalance} shares`);

You can also call the Morpho GraphQL API and fetch the vault live data:

const query = `
    query {
      vaultByAddress(
        address: "${MORPHO_VAULT_ADDRESS}"
        chainId: ${BASE_CHAIN_ID}
      ) {
        state {
          sharePriceUsd
          apy
        }
        asset {
          priceUsd
        }
      }
    }
  `;

const response = await fetch("https://api.morpho.org/graphql", {
    method: "POST",
    headers: { "Content-Type": "application/json" },
    body: JSON.stringify({ query }),
});

const json = await response.json();

console.log("Vault data:", JSON.stringify(json.data, null, 2));

Withdraw from the vault or redeem the whole amount

Call the withdraw function if you want a specific amount:

 const withdrawAbi = parseAbi([
    "function withdraw(uint256 assets, address receiver, address owner) external returns (uint256 shares)",
]);
const { request: withdrawReq } = await publicClient.simulateContract({
    abi: withdrawAbi,
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    functionName: "withdraw",
    args: [
      parseUnits("0.1", 6),
      (turnkeyAccount as Account).address,
      (turnkeyAccount as Account).address,
    ],
    account: turnkeyAccount as Account,
});
const withdrawHash = await client.writeContract(withdrawReq);

console.log("Withdraw transaction:", `https://basescan.org/tx/${withdrawHash}`);

Or redeem for the full shares amount:

const balanceAbi = parseAbi([
    "function balanceOf(address account) external view returns (uint256)",
]);

const rawBalance = await publicClient.readContract({
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    abi: balanceAbi,
    functionName: "balanceOf",
    args: [turnkeyAccount.address],
});

// Redeem all user shares
const redeemAbi = parseAbi([
    "function redeem(uint256 shares, address receiver, address owner) external returns (uint256 assets)",
]);
const { request: redeemReq } = await publicClient.simulateContract({
    abi: redeemAbi,
    address: MORPHO_VAULT_ADDRESS as `0x${string}`,
    functionName: "redeem",
    args: [
      rawBalance,
      (turnkeyAccount as Account).address,
      (turnkeyAccount as Account).address,
    ],
    account: turnkeyAccount as Account,
});
const redeemHash = await client.writeContract(redeemReq);

console.log("redeem tx:", `https://basescan.org/tx/${redeemHash}`);