MIP 124 - Vault V2 Specific Incentive Campaign

Morpho Blue Rewards
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Summary

Introduce a dedicated incentive campaign to accelerate migration from Vault V1 to Vault V2.

Proposal

Vault V2 was released a few weeks ago. To facilitate a smooth transition and ensure that Market V2 can bootstrap liquidity efficiently once it launches, we propose creating a targeted rewards campaign focused on growing deposits in Vault V2.

This campaign is designed to incentivize users to move from Vault V1 to Vault V2. The migration is strategically important because Vault V2 will be able to place offers on Market V2 while continuing to allocate deposits to Market V1 during the transition period.

The proposed campaign would add, on top of the existing Vault V2 yield, an additional reward rate that would start very high when Vault V2 supply is small and would progressively converge toward the Vault V1 reward rate as total Vault V2 deposits approach $400 million.

To achieve that, we computed that it would increase the current rewards budget by approximately 14% which seems a reasonable number.

We believe this targeted incentive program will accelerate adoption of Vault V2, strengthen liquidity ahead of the Market V2 launch, and improve the overall migration experience for users.

This campaign would follow the Optimistic Rewards Framework as defined in MIP-109.

If approved, the initial campaign would run from mid-December through the end of December, with subsequent campaigns aligned monthly with the standard Morpho rewards cycles.

2 Likes
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To enable Vault V2 specific rewards campaigns, the Merkl team will need to dedicate some engineering that was not expected. As a matter of fact, it is not possible to create such type of rewards for now. We propose to conduct the first campaign once Merkl has enabled the feature, which should happen early January.

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Does the MA expect incentive distribution to remain Merkl dependent long term, or is this viewed more as a mid term stopgap?

More specifically, is a Morpho URD v2 being considered down the line? Incentive campaigns often need to “strike while the iron is hot” to bootstrap liquidity effectively, and reliance on external dependencies can introduce delays when timing matters most.

That said, mid-January seems very reasonable given the holiday period. I’d just want to avoid this becoming a recurring pattern or slipping much further, especially with Markets V2 on the horizon.

Cheers, and happy holidays to the team and community!