Liquidity Observation Lab <> Morpho Blue Incentives in the wstETH markets


The Liquidity Observation Lab (LOL) intends to distribute 132 wstETH as incentives to support the adoption of wstETH markets on Morpho Blue over three months.

We propose that Morpho DAO handle this distribution and request that MORPHO tokens be included as additional incentives.

Proposal Details

Unlike traditional lending pools, Morpho Blue allows a more targeted approach to incentivizing specific use cases.

The LOL plans to allocate 132 wstETH as incentives to bootstrap relevant wstETH markets on Morpho Blue. We propose that the Morpho DAO handle this distribution by integrating it into its reward distribution system, following the Standardized method for distributing incentives on Morpho Blue markets.

The growth of such markets will benefit Morpho, therefore it’s prudent for Morpho DAO to distribute MORPHO tokens to help incentivize its expansion.

Should the proposal be accepted, LOL will send the (aforementioned) incentives to morpho.eth


I’m delighted to see this initiative.
I welcome any initiative that promotes the adoption of Morpho Blue and the provision of liquidity.
Even more so when it comes from well-known and recognised players.

It seems to me that, as well as targeting a market, Morpho Blue also makes it possible to target suppliers and/or borrowers. I suppose that, since no distinction is made, both parties will be rewarded equally?

Perhaps a question more for Morpho, on the practical side, who is going to be behind the creation of this market (in order to provide incentives, it has to exist).
Will there be a set of markets created by Morpho (or other actors) for the start-up (including this one)?

I’m in favour of accompanying these rewards with a $MORPHO token issue, I’m curious to see if there is an equivalent model for selecting the markets to be incentivised and quantifying the amount of rewards as there is a model for optimisers.

Speaking of incentive amounts in Morpho. What would be the incentive amount for the dedicated LOL over these 3 months?

Thanks again! Full support!

@adcv Thanks for this proposal.

It is great to see that Liquidity Observation Lab believes in the symbiosis between Blue and stETH and is committed to making it happen.

wstETH is the most used collateral in DeFi lending. As an illustration, it represents over 99% of the collateral used in Morpho AaveV3-ETH Optimizer. Since it represents such an important part of Morpho Blue’s potential, we suggest to allocate a total of 1.4M MORPHO over the three-month period.

The wstETH and MORPHO rewards would be distributed across markets that use wstETH as collateral and are part of a whitelisted MetaMorpho vault. This is the case of the USDC(wstETH) and WETH(wstETH) markets. We suggest that the incentives be split 50/50 between these two markets. The distribution on each market 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 wstETH on morpho.eth.

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


Hey @albist, thanks for your support!

In case you missed it, the association published a forum post detailing a Standardized method for distributing incentives on Morpho Blue markets that will be used on the wstETH markets. It should answer your questions about incentives.

Regarding market creators, Block Analytica is creating the WETH(wstETH) market and Steakhouse is creating the USDC(wstETH) market. Note that market creation is permissionless, so anyone can create a market. Vault managers then decide which markets to list in their MetaMorpho vaults.

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The vote is live!

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