Ether.fi <> Morpho Blue - Incentives in the eETH market

Summary
ether.fi intends to distribute US$45,000 equivalent of USDC as incentives in the weETH / WETH Morpho Blue market over three months, starting on the launch date of Re7’s vault (which is expected to list this market).

ether.fi proposes that the Morpho DAO handle this distribution and request that MORPHO tokens be included to match the ether.fi deposit as additional incentives.

ether.fi x Morpho Blue
Unlike traditional lending pools, Morpho Blue allows ether.fi to take a more targeted approach to incentivizing specific use cases. On Morpho Blue, ether.fi can incentivize a specific pair of assets with a strong use case that will help drive further adoption of the ether.fi LRT token - weETH. The Re7 weETH / ETH Vault falls into this category.

ether.fi is a decentralized, non-custodial liquid restaking protocol built on Ethereum, allowing users to stake their ETH and participate in the DeFi ecosystem while maintaining composability. The protocols eETH is a liquid restaking token (weETH is the non-rebasing equivalent), serving as a representation of ETH staked on the Beacon Chain and natively restaked through EigenLayer. Users can deposit ETH to mint eETH, hold eETH to accrue rewards, wrap eETH to weETH to use within DeFi, or redeem for ETH at any time via the liquidity pool.

ETH staked through ether.fi accrues normal Ethereum staking rewards, and is also natively restaked with EigenLayer, earning EigenLayer points, and once EigenLayer is live with AVS’, additional restaked APR. Natively restaked ETH allows users to keep composability of their eETH throughout DeFi.

This will allow for borrowers to have leveraged natively re-staked ETH strategies. By depositing an LRT as collateral in a money market, borrowing ETH and swapping or depositing the borrowed ETH again in to an LRT, users can take advantage of the spread between the staked ETH return and the borrow rate, in addition to leveraging up on EigenLayer exposure, to create a leveraged position that earns a multiple of yield.

Proposal Details
The ether.fi protocol plans to distribute incentives in USDC on a linear basis. This will work out to approx $5k - $15k - $25k in total per month, with a constant daily rate, starting on the launch date of the vault.

We propose that the Morpho DAO handle this distribution by integrating it into the Standardized method for distributing incentives on Morpho Blue markets.

The growth of such a market will benefit Morpho, therefore it’s prudent for the Morpho DAO to distribute MORPHO tokens over the three month period to help incentivize its expansion.

Should the proposal be accepted, we will send the aforementioned amount to morpho.eth.

8 Likes

Thanks for this proposal. I’m in favor.

2 Likes

Thanks a lot for your proposal @RupertPumpkin
I’m 0xloh, Growth Lead at Morpho Labs

Suporting Eth.Fi’s weETH incentives would be great way to foster the growth of the Morpho Blue liquidity ecosystem, specifically via restaking looping strategies, pioneering this use-case for lending on Morpho Blue and aligned with Re7 scope of curation.

Strongly in support of this proposal

3 Likes

@RupertPumpkin Thanks for this proposal.

It is great to see that ether.fi believes in the symbiosis between Blue and weETH and is committed to making it happen.

Staked ETH as collateral is an important use case in DeFi lending and we believe the weETH/ETH market has great potential alongside the Re7 vault. We propose to allocate a total of 90k MORPHO as incentives over the three month period to help grow this market.

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

A vote will be scheduled in the next few days. Should the vote pass, its execution will be conditioned on the receipt of the wetETH on morpho.eth.

2 Likes