As a depositor and ecosystem member (providing trustless onchain Guardians) Aragon fully supports the move to make the MORPHO token transferable upon proper discovery and strategic alignment on Morpho’s governance. Transferability is an important next step in Morpho’s mission of becoming a battle hardened public good that can stand the test of time.
Jesse Waldon’s, progressive decentralization playbook, outlines 3 key components for success in crypto.
- Product Market Fit (PMF)
- Community Participation
- Sufficient Decentralisation (community ownership)
Written in 2020 at a time when real, trust-minimized, and onchain DAOs were more common, the past 4 years have proven that these 3 requirements hold true more than ever, and there is no short-cut to creating and sustaining them.
My belief upon looking at Morpho’s meteoric rise, is that Morpho has reached PMF far greater than the vast majority of other projects, has a larger community with more aligned incentives than the vast majority of other projects, and would be sufficiently decentralized to begin token transferability. There are ways of making the token transferable while decentralizing permissions, incentive mechanisms, and fee-capture overtime that can be done safely and securely.
I suggest a few steps to confirm this is true and consider setting milestones if needed:
- Drive towards increasing the profitability for vault managers, thus increasing the incentives for their continued participation in the Morpho ecosystem. Consider working with vault curators to incentivise their own vaults in an attempt to increase competition, while decreasing the burden on Morpho for this.
- Get a temperature check from investors and VC’s on their willingness to participate in governance and/or use tokenomic systems such as a veToken model. Most VC’s, especially US based ones refuse to participate in governance, even in the most severe circumstances, which creates huge risks for projects.
- Continue kicking-ass and driving adoption!
Before this takes place defining a decentralisation roadmap will be crucial in ensuring success. Most “DAOs” launch their token without proper checks and balances, onchain governance consideration, nor value capture. This has led to huge drops in token prices, protocols/projects captured by misaligned delegates due to voter apathy, increased regulatory risk, and the inability to build & design what they want due to missed technical standards.
Before token deployment I would recommend:
- Define your goal. Morpho has always been an extremely focused team, driving for minimization of dependencies and different types of technical and social debt. I recommend moving forward with the same values and letting the community be empowered by that, without the builders being overburdened by overhead.
- Defining what is to be governed, and when! It is okay to move permissions over slowly.
- Designing a system that creates long-term incentive alignment over a longer-period of time, while still having some flexibility.
- Building a strong social layer that keeps community members informed and engaged when required and for the right reasons.
There are many ways to build the above. Based on my view and participation with Morpho over the last year or longer I would recommend:
- A governance overhead minimized approach. Optimistic governance for certain decisions. Starting with an onchain permissioned proposal process. Voters would need to veto. A council can create a proposal. This can be removed over-time.
- Use gauges. Gauges are hot again and thus a veToken model can be built along with it. The veToken model was invented by Curve on Aragon and has seen over 44% of their token locked away. Curve was the first, and we’ve learned a lot since their launch. Including ways to make the veToken model more flexible and carrot driven over stick driven. We have 10+ medium to large DAOs, including a large rollup and LRT, in our pipeline currently building with a new veToken design that we will be releasing for everyone in the next few weeks.
Gauges are another way to decrease governance overhead, create a token sink, drive decision making on incentives by the community, and decrease potential attacks.
In conclusion, making the MORPHO token transferable is a necessary and important evolution. It will enhance decentralization, increase incentivize long-term commitment, and expand network effect, placing Morpho alongside the largest projects in the industry. Aragon fully supports opening token transferability and is here to help Morpho and the community as much as possible to do this successfully.