Curve <> Morpho Blue - Incentives for the crvUSD markets

Curve <> Morpho Blue - Incentives for the crvUSD markets

Summary

I plan to distribute $250k worth of CRV tokens as incentives for the Morpho Blue markets to make up the crvUSD MetaMorpho Vault. This MetaMorpho Vault will be managed by LlamaRisk, who has proposed whitelisting for this initiative.

LlamaRisk requests MORPHO token from Morpho DAO to incentivize crvUSD markets in addition to the $250k in CRV.

Over three months, the CRV and requested MORPHO tokens will incentivize participation in the crvUSD MetaMorpho Vault markets. LlamaRisk proposes that Morpho DAO distribute CRV and MORPHO token incentives for these markets.

Curve x Morpho Blue

Curve is a major automated market maker (AMM) in decentralized finance, with a total value locked (TVL) of $2.5 billion. It has issued crvUSD, a stablecoin with a current circulating supply of approximately $160 million that maintains a close peg to the US dollar.

CRV is the governance token of the Curve DAO, which can be locked as veCRV to earn trading fees and lending fees associated with crvUSD.

Unlike traditional lending pools, Morpho Blue allows Curve to incentivize specific use cases more precisely. On Morpho Blue, Curve can incentivize particular asset pairs with strong use cases, potentially driving further adoption of crvUSD.

Proposal Details

The crvUSD MetaMorpho vault will use a Convex liquidity pool wrapper token to maximize yield for depositors of Morpho Blue markets.

Collateral Asset Loan Asset Tokens in this pools
TricryptoUSDT crvUSD USDT/ETH/WBTC
TricryptoUSDC crvUSD USDC/ETH/WBTC
TricryptoLLAMA crvUSD crvUSD/wstETH/tBTC
TryLSD crvUSD wstETH/rETH/sfrxETH
TriCRV crvUSD crvUSD/ETH/CRV

For further technical details consult the LlamaRisk proposal

Rewards Amount

The proposal involves distributing $250,000 worth of CRV tokens as rewards across the relevant markets over three months. At the time of writing, this equates to approximately 357,000 CRV tokens based on the price of $0.70 per CRV.

The distribution will occur in two payments. The first payment will be 160,000 CRV tokens. The second payment will be the remaining amount of CRV tokens, adjusted based on the CRV price at the time minus the initial 160,000 CRV. The second payment is scheduled for day 60 of the program.

The final CRV price for the 90 days will be determined using a 7-day time-weighted average price (TWAP) calculated on the first day of the rewards distribution.

Rewards distribution

I propose that Morpho DAO integrate the distribution of incentives into the Standardized method for distributing incentives on Morpho Blue markets.

Since the incentive package involves multiple markets, LlamaRisk will have the flexibility to allocate the monthly amount across new or existing markets as they deem fit during each epoch (monthly period).

The growth of such markets would benefit Morpho, so it is prudent for the Morpho DAO to distribute MORPHO tokens over the three months to help incentivize market expansion.

Should the proposal be accepted, the specified amount will be sent to Morpho.eth in two installments: the first on day one and the second on day 60.

Nice Llama pic for the sake of it, created by Llama Risk

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@michwill Thanks for this proposal.
Great to see crvUSD coming on Morpho and your willingness to develop it!

We believe the crvUSD MetaMorpho vault has great potential and we propose to allocate a total of 500k MORPHO as incentives over the three month period to help it grow. Following your payement schedule, 4/9th of the MORPHO amount will be distributed during the first 60 day period, and 5/9th during the last 30 days.

The CRV and MORPHO distributions would follow the Standard method for distributing incentives on Morpho Blue markets .

A vote will be initiated shortly. Should the vote pass, its execution will be conditioned on the receipt of the first payment for the first 60 days, and the second payment for the last 30 days.

NB: distribution of incentives by the MORPHO DAO does not signify endorsement of market risks.

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