Summary
Authorize incentives distribution on Unichain, with an initial allocation of $175k MORPHO, $75k OP, and $250k USDC.
Context
The Morpho Association has identified Unichain as a strategic growth opportunity for the Morpho Protocol. In particular, hooks offer two advantages for the growth of lending markets:
- increased capital efficiency through rehypothecation and/or just in time liquidity
- hooks that improve AMM efficiency will encourage better liquidity depth which helps to support leverage loops and liquidations
UI Support
If this proposal passes, Unichain will receive full frontend support within the main Morpho UI.
Proposed Incentives
The Morpho DAO has received a grant in OP tokens to support USDT0 growth on the Superchain. Additionally, the Morpho Association has received a $250k USDC grant that can be used to incentivize Unichain growth.
We propose that the MORPHO DAO authorize the use of $175k MORPHO tokens based on a two week TWAP ending on the day the proposal is approved by the DAO, in addition to $75k OP from the USDT0 growth grant, using the same TWAP period.
This will make a total incentives package of ~$500k, to be distributed over a three month period.
All incentives will be distributed via Merkl.
Relevant Assets
Lending assets : ETH, USDC, USDT0
Collateral assets (for borrow side incentives): ETH, wstEth, WeEth, ezEth, rsEth, wBTC, kBTC.
Note that some eligible collateral assets may not have adequate liquidity at launch day, this proposal does not imply that all these assets will receive borrow side rewards immediately, but that they are within the rewards scope.
We propose that the Morpho Association can enable borrow rewards for any of the assets on this list when conditions are appropriate, as well as whitelist new collateral assets for borrow-side rewards if sufficient liquidity and demand is established. Likewise, we propose that the Morpho Association be authorized to add new incentivized lending assets should relevant opportunities arise.
Distribution Ratios
We propose to allocate 60% of rewards to ETH lenders, 30% of rewards to stablecoin lenders, and 10% of rewards to borrowers. These ratios can be adjusted as needed once initial liquidity growth is observed by the Morpho Association according to the existing Optimistic Rewards Framework.
The incentives rate are proposed to ramp up gradually, reach a peak, and then ramp down (unless an extension is confirmed prior to the end of the period, in which case the ramp down schedule can be revised) as follows:
| Week | Incentive |
|---|---|
| 1 | 22,500 |
| 2 | 27,500 |
| 3 | 32,500 |
| 4 | 37,500 |
| 5 | 42,500 |
| 6 | 47,500 |
| 7 | 52,500 |
| 8 | 57,500 |
| 9 | 52,500 |
| 10 | 47,500 |
| 11 | 42,500 |
| 12 | 37,500 |
The rationale for the focus on ETH lending liquidity is that we anticipate LST and LRT assets to be key growth categories in the early period. Unichain’s focus on DEX technology is likely to make it a premier venue for LST/LRT liquidity.
In addition, we propose to offer SparkDAO 50% of the public MORPHO rewards rate for their USDC or USDT0 liquidity provision should they choose to allocate on Unichain as they do on Base, up to a deposit size of $50M. Further deposits by Spark above $50M, or lending allocations by them against collateral assets not specified in this proposal, will not receive MORPHO rewards unless authorized by the DAO in a subsequent proposal.