Morpho Governance

Accept ownership of Morpho Protocol instances deployed by the Morpho Association across a large number of chains, including but not limited to those described in the forum discussion.

Reduce MORPHO rewards rate on Ethereum mainnet by 20% across all assets. Apply a multiplier of 2/3 to ETH denominated assets (a 1/3 reduction in rates) and 1/6 to BTC denominated assets (a 5/6 reduction in rates) on Ethereum mainnet and Base.

Whitelist Aerodrome Finance for use as a liquidity venue in the Aera vault already authorized by the Morpho DAO on Base, including locking AERO rewards and voting for further AERO liquidity incentives in MORPHO pools.

This is a proposal to proceed with optimizer deprecation by setting a target date for a full pause of new supply and borrow on the optimizers of December 20. On that date, take the following actions: Pause supply and borrow of remaining unpaused assets on the Aave v2 optimizer (WETH, USDC, and WBTC) Pause supply and borrow of remaining unpaused assets on the Aave v3 optimizer (wstETH collateral, supply/borrow of ETH) This will prevent all new supply and borrow across all optimizers. Existing positions will not be impacted. After allowing time for suppliers and borrowers to close their positions, the DAO can consider final deprecation steps in a future proposal, such as adjusting parameters to encourage closing any remaining positions, and removing optimizer support from the frontend.

The Berachain Foundation has proposed to license the Morpho Protocol code for use in a deployment on the Berachain network. This vote directs the Morpho Association to complete a licensing agreement based on the proposed terms posted in the forum, including finalizing the commercial terms and confirming that the Berachain Foundation has onboarded a qualified vault curator as specified in the proposal. After this agreement is completed, the Berachain deployment will be added to the list of authorized uses found at morpho-blue-core-license-grants.morpho.eth. License details for the Morpho code can be found here.

This is a proposal to increase the MORPHO rewards rate on Base by 30% by raising the S_lim from $60M to $78M. This is part of a series of proposals to scale MORPHO rewards on Base as the Base instance of the protocol grows.

Establish a grants pilot program with 200k MORPHO available, with a call for grants open as of this proposal passing and a deadline of January 1. The Morpho Association will post a top level forum thread to contain all grant proposals under this program, as well as template materials for submissions. All grant applications must define objectively measurable impact metrics. Grants will be funded based on which receive the most votes, with ties broken in favor of the grant with the lower funding request. Adopt a standard framework where 20% of the grant’s budget is paid up front, 20% paid upon the completion of the work described in the application, with the remainder based on the objective metrics defined in the grant application.

In 2022, the Morpho DAO voted for the allocation of 7.9% of the MORPHO token supply to be distributed to contributors to the protocol (eg employees of Morpho Labs, service providers, contractors, research institutes). The Morpho Association is presenting to the Morpho DAO the allocation of MORPHO in 2022-2023 for final review and distribution by the Morpho DAO. This is a vote to ratify this distribution as specified in the forum, and establish a process where the Morpho Association will submit allocations annually to the DAO for review and distribution.

OneTrueKirk proposed on the Morpho forum that the DAO allocate 175,969 MORPHO tokens to the Credit Guild GUILD holders as part of his commitment to become a contributor to the protocol. Of these tokens, half will be sent to the Credit Guild multisig (address 0xcBB83206698E8788F85EFbEeeCAd17e53366EBDf) for immediate distribution, while the other half will be subject to a one year unlock period. During this vesting period, he proposed to accomplish milestones including: 1. Fostering a strong delegate community and ensuring a high delegation rate of MORPHO tokens 2. Creating a state of the art governance system which is simple and robust for the long term, yet able to scalably support deployments on multiple chains, and avoid common pitfalls like treasury raids or failures to meet quorum 3. Applying lessons and insights from the Credit Guild regarding oracle risk, pool governance, and liquidations to future versions of the Morpho stack

The Morpho DAO has recently passed to implement an upgradeable wrapped token (https://snapshot.org/#/morpho.eth/proposal/0x53c5f01dac396b97650f37fccfa0910457b27a1fc06c5ec5d54ee0e6e5408180) that will enable onchain governance and other functionality, and make this the primary form of the MORPHO token for integrations. There are legacy MORPHO tokens currently held in integrator and their respective proxy addresses that have interacted with the Morpho protocol. This proposal seeks to whitelist these addresses, allowing these holders of the legacy MORPHO token to wrap them into the upgradeable wrapped token.

The Morpho DAO has recently passed two proposals involving the MORPHO token: 1. To implement an upgradeable wrapped token (https://snapshot.org/#/morpho.eth/proposal/0x53c5f01dac396b97650f37fccfa0910457b27a1fc06c5ec5d54ee0e6e5408180) that will enable onchain governance and other functionality, and make this the primary form of the MORPHO token for integrations 2. To make the MORPHO token transferable (https://snapshot.org/#/morpho.eth/proposal/0x0657c83ada33fe85478672483c81dd1c11282b633031c0ff60f5a06417b5ef52) This situation creates a risk that users will accidentally use the legacy MORPHO token instead of the wrapped one when using external integrations like decentralized exchanges, potentially resulting in loss of funds. This is a proposal to amend the technical implementation steps for these proposals such that only whitelisted contracts such as the wrapper, bundler, and onchain vesting contracts can transfer the legacy MORPHO token, but EoAs cannot, ensuring that the risk described above is prevented. All users will still be able to freely convert 1:1 between the wrapped and unwrapped forms at any time.

Engage with Aera/Gauntlet to provide DEX liquidity for the MORPHO token upon transferability, as discussed in this forum thread. Initial funds would be provided to the Aera vault by the Morpho Association, with the DAO to consider whether to make further allocations at a future time. The DAO will conduct quarterly reviews of the vault performance when deciding whether to renew or expand the program. Vote options: Approve the Aera/Gauntlet vault liquidity strategy Do not approve

Proposal I propose that the Morpho DAO make the MORPHO token transferable and ensure that MORPHO rewards distributed on Base are claimable at a similar time. Steps to Enable Transferability Based on the above, I propose the Morpho DAO proceed with enabling transferability by following these steps: 1. Prepare for transferability on Base: a. Deploy the new version of the MORPHO token on Base using this factory: https://basescan.org/address/0xF10122D428B4bc8A9d050D06a2037259b4c4B83B#code 24See this discussion for the difference between new and legacy versions of the MORPHO token: https://snapshot.org/#/morpho.eth/proposal/0x53c5f01dac396b97650f37fccfa0910457b27a1fc06c5ec5d54ee0e6e5408180 40 b. Whitelist the wrapper contract to transfer the legacy nontransferable MORPHO token. c. Wrap 2,500,000 MORPHO tokens and bridge them to the DAO multi-sig on Base. d. Prepare payload to submit the root to the universal rewards distributor (URD) and transfer new wrapped MORPHO tokens from the DAO multi-sig on Base to the URD. 2. Enable transferability: a. Set the transfer and transferFrom public function as true on Ethereum and remove the role 0. 3. Make MORPHO claimable on Base: a. Execute payload to submit root to the URD and transfer new wrapped MORPHO tokens from the DAO multi-sig on Base to the URD, allowing users to claim MORPHO rewards.

Technical Details: 1. Develop and deploy a new token contract on mainnet with the features described below: 1. Total supply of 1B, which will ensure all current MORPHO tokens can be wrapped for any holders who choose to enable the wrapper contract 2. Upgradeable proxy implementation, which would allow the DAO to make upgrades without the need for deploying new wrapper contracts in the future 3. Data structures to track an address's chosen delegate, if any, and the voting power of each address including delegations so that users can participate in onchain voting in the future once the DAO selects a governance implementation. For reference, see the standard open source implementation from OpenZeppelin, ERC20Votes 2. Deploy contract instance compliant to the bridged token interface for all tokens that will be made claimable on Base, or that users choose to bridge in the future. The Base contract will have the same voting and upgradeability features, while wrap/unwrap will be supported only on mainnet, since the original MORPHO token will not be deployed on Base 3. Deploy a wrapper contract to enable users to wrap to the new token contract, with the initial supply of 1B tokens minted to the wrapper. 4. Add support for using the wrapper contract to the UI, including: - ability for holders of the existing MORPHO token to wrap it and participate in governance - bundling of claim and wrap flows so that future token claimers can receive the wrapped version without the friction and cost of a separate wrapping step - token delegation interface 5. Use the wrapped MORPHO token for future onchain incentives. Existing Merkl claims and vesting contracts will be unaffected.

Proposition to raise the S_lim for suppliers by 20% to $60M on Base network.

The introduction of new scalable rewards has streamlined the rules, reduced operations, and simplified strategy for curators as they navigate different markets. However, since its introduction and deployment on Base, targeted measures have been taken. We propose to re-unify the rules: Idle markets will be included in the scalable reward system; A market that is rewarded on the lending side will be rewarded on the borrowing side by default; The borrowing reward rate will be one-tenth of the supply reward rate.

The Morpho Association suggests lowering the reward for borrowing WETH on BASE to 1/10th of $r^S$. WETH is used for leverage, and rewarding the borrowing side too much risks shifting the native APY so that some looping strategies may become unprofitable without rewards, which would hinder the natural growth of the market.

We propose continuing the deprecation of low-usage assets on Morpho Optimizers, which started 3 months ago in MIP52. We also suggest stopping all MORPHO rewards on Optimizers to further incentivize migrations to Morpho Blue.

We propose adding USDA and wUSDM as rewarded borrowed assets to support the growth of these markets. The rewards rates will depend on the network, as the rB value is distinct for Ethereum and Base.

The Morpho Association is requesting 120M MORPHO to support the ongoing development and growth of the Morpho Protocol. This amount would allow the Morpho Association to continue to advance Morpho’s decentralized lending infrastructure, build a globally trusted brand, and scale go-to-market operations. Vote on allocating the requested MORPHO to the Morpho Association. See the full proposal below.

Morpho Blue was launched on Base 10 days ago and has grown strongly since then, with over $40M in deposits already. We propose several adjustments in the rewards strategy on Base: Update supply rewards rate setting: The initial $S_{lim}$ set has been far exceeded. We suggest updating the reward model settings on Base with the following values: $r^S_0=2.20E-04$ MORPHO per dollar deposited per day $S_{lim}= $50,000,000$ Start incentivizing borrow: The supply volumes are significantly higher than the borrowing volumes, resulting in utilization levels below target. To address this, we propose incentivizing the borrowing side on the following loan assets: WETH, USDC. The incentive rate, $r^B$ is proposed to be $\frac{r^S}{3}$ (0.73E-04 MORPHO per dollar borrowed per day). Include idle markets in rewards: The bootstrapping phase of new markets can be challenging for MetaMorpho vaults. To streamline this process, we suggest including idle markets in both the reward system and the accounting of Morpho Olympics grants (this would apply to Base only).

Morpho Blue was launched on Base 10 days ago and has grown strongly since then, with over $40M in deposits already. We propose several adjustments in the rewards strategy on Base: Update supply rewards rate setting: The initial $S_{lim}$ set has been far exceeded. We suggest updating the reward model settings on Base with the following values: - $r^S_0=2.20E-04$ MORPHO per dollar deposited per day - $S_{lim}= \$50,000,000$ Start incentivizing borrow: The supply volumes are significantly higher than the borrowing volumes, resulting in utilization levels below target. To address this, we propose incentivizing the borrowing side on the following loan assets: WETH, USDC. The incentive rate, $r^B$ is proposed to be $\frac{r^S}{3}$ (0.73E-04 MORPHO per dollar borrowed per day). Include idle markets in rewards: The bootstrapping phase of new markets can be challenging for MetaMorpho vaults. To streamline this process, we suggest including idle markets in both the reward system and the accounting of Morpho Olympics grants (this would apply to Base only).

The Morpho Association proposes to deploy this system on Base as well, with the following values: r0 = 5.45E-04 MORPHO per dollar deposited per day S_lim = $10,000,000 The values of r0 and Slim can be adjusted by governance as the volume increases.

The Morpho Associations proposed introducing a new framework for distributing MORPHO rewards to Morpho Blue users. The framework defines a set of trusted vault curators and applies a uniform reward rate for each dollar supplied in a market listed by these curators. It also includes rewarding borrowers using a similar model.

The Morpho Association proposes to allocate a total of 6,667 MORPHO on the wOETH/WETH for the first 30 days. The market would then be integrated into the new distribution system. NB: distribution of incentives by the MORPHO DAO does not signify endorsement of market risks.