# MIP 134 — Incentives Distribution on Arc

MORPHO & Treasury
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MIP 134 — Incentives Distribution on Arc

Summary

Authorize incentives distribution for activity on Arc with an initial monthly budget of $50,000 based on a one month TWAP price for the MORPHO token, governed under the Optimistic Rewards Framework.

Context

The Morpho Association has identified Arc as a strategic growth opportunity for the Morpho Protocol based on the existing adoption of USDC on Morpho across networks, the launch of new products such as cirBTC, and the level of integrator demand.

As the MORPHO token is not deployed on Arc, rewards will be distributed on Ethereum if the proposal is approved.

Initial Campaign

Incentives expected to be used primarily for borrow side rewards promoting healthy utilization of liquidity bootstrapped on Arc, across both Morpho Blue and Morpho Midnight.

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It would be useful to track the impact of the incentives on Arc through clear metrics such as incremental supplied and borrowed liquidity, user growth and retention, and the share of activity that remains after incentives decline. This would help assess whether the initial monthly budget is generating sustainable adoption.

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Given that MORPHO is currently not deployed on Arc and rewards would be distributed on Ethereum, I’m curious about the UX/interop implications of that setup. Do you expect any meaningful friction from cross-chain reward claiming, and could native MORPHO deployment on Arc become relevant if the market gains sufficient adoption?