MIP 83 - Morpho Blue license 🐻

[Berachain-Foundation]

Abstract

The purpose of this engagement is to grant Berachain a non exclusive license of Morpho Blue

Background

Berachain is an innovative EVM-identical Layer 1 blockchain built on the ComeBFT, featuring a novel Proof-of-Liquidity (PoL) consensus mechanism. This high-performance blockchain aims to address key challenges in the decentralized finance (DeFi) space by aligning incentives between validators, protocols, and users. Berachain offers full compatibility with Ethereum tools and smart contracts while providing enhanced scalability and efficiency through its BeaconKit framework. The project utilizes a unique tri-token system consisting of BERA (gas token), BGT (governance token), and HONEY (stablecoin) to create a robust ecosystem that rewards liquidity providers and promotes decentralized decision-making.

On Berachain, governance has the ability to enable enshrined applications that serve as a baseline of product for the ecosystem:

• Bex (A DEX),

• Bend (A Money Market)

One of these, BEND, is a money market that takes in a limited set of collateral assets, and has HONEY as the only borrowable asset.

Motivation

As the Berachain Foundation, we recognize Morpho Blue’s emergence as a cutting-edge lending protocol in the DeFi space, known for its efficiency and innovative design. Berachain aims to support the expansion of advanced DeFi protocols and proposes integrating Morpho Blue into our ecosystem to enhance lending capabilities within our innovative Proof-of-Liquidity (PoL) environment. This integration will reinforce Morpho Blue’s position as a leading liquidity market across chains and open up new possibilities for growth and collaboration between Morpho and Berachain.

Integrating Morpho Blue with Berachain as the backbone for Bend will enable access to our unique liquidity incentives through the PoL mechanism, while allowing Berachain users to interact with a premier lending protocol. Additionally, it will allow other applications, vault curators, and users to further expand Morpho’s presence onto Berachain through the creation of new Morpho Blue vaults.

Our EVM-identical architecture ensures that Morpho Blue can be deployed without significant reconfiguration, minimizing development efforts and costs.

Specification

Licensing and support

• Licensing: Provide Berachain license to fork and operate the code for as long as needed without any exclusivity, limited to deployment on Berachain
• Support:
  • Review and validate protocol integration
  • Notify any relevant updates or relevant changes on forked code (Berachain will assess internally if something we need to change internally for Bend)
  • Share automated services needed for set up and operation (Open Source Bot for liquidation and monitoring tools for Admin App live)

Roles and Responsibilities

• Berachain:
  • Develop required smart contract integrations and changes.
  • Deploy, manage, and monitor smart contracts post-deployment.
  • Implement and maintain our proprietary front-end, back-end and brand design (UI/UX).
  • Implement PoL mechanics.
• Morpho:
  • Fork open hour support once a week before deployment and/or give availability for async support where needed
  • Share availability for organizing call if needed (less than 1 per month) after deployment

Commercial terms

Berachain Foundation proposes to compensate the partnership with the following:

• A license fee paid to the Morpho DAO in the form of USDC and BERA tokens, totaling low 7 figures in value (at most recent valuations)

Next Steps

1. Grant License
   a) Once Morpho governance will review and validate the proposal the first step will be issuing Berachain a non-exclusive license for Morpho Blue, enabling Berachain to fork and operate Morpho Blue’s code within the Bend money market framework and its own front-end.
2. Select and Onboard Vault Curator and Risk Manager
   a) Berachain will identify and onboard a qualified vault curator and a dedicated risk manager prior to deployment. The curator will be responsible for setting and monitoring key risk parameters such as loan-to-value ratios, liquidation thresholds, and other metrics tailored to Berachain’s PoL mechanism.
   b) This team will work closely with Berachain to ensure alignment on risk management practices and optimal vault performance both before and during the deployment.
3. Set Up Support Mechanisms and relevant tools

[cmrn]

Love this development!

@Berachain-Foundation

A license fee paid to the Morpho DAO

Are you not trying to say the numbers?

It’s a safe space here

[0xloth]

Thanks for this exciting proposal, @Berachain-Foundation, which marks Morpho’s first friendly fork proposal! I am supportive of this proposal for the following reasons:

1. Morpho hasn’t planned to deploy on Berachain in the near term
2. The Berachain Core team will support/operate the fork under its own name and work with an established Morpho Curator who has deep knowledge of the Morpho stack
3. The proposal includes a compensation to the Morpho DAO
4. Morpho Integration team support is scoped and bounded in time

[0xAttrakt]

Great proposal that aligns Morpho and Berachain for the long term.

• Will the new protocol align to the development roadmap of Morpho or will it diverge and have its own direction?
• Will there be governance of the new protocol? How will protocol governance operate between Morpho, Bend and Berachain Foundation?

[Leuts]

Very cool and exciting proposal!

I am supportive of this proposal in general, however, it seems quite light on the terms. Is there any particular reason the license fee amount, etc. is not being shared? It would be interesting to share information on other friendly forks in other ecosystems to see what fees they have generated to find a reasonable number?

Thanks!

[whoiskevin]

Berachain operates under the structure of three enshrined dApps, a native decentralised exchange, a native perps market and also a native money market.

These enshrined dApps are controlled and maintained by the Berachain Foundation themselves.

A direct beta to the success of the chain is the success of the natively enshrined dApps.

If Berachain is “successful”, it is undoubted, that the enshrined dApps, including Bend, will also command a significant amount of sucess.

[Gauntlet]

We’re excited to see the Berachain Foundation in the Morpho Forums requesting a non-exclusive license grant for Morpho Blue. The proposal to integrate Morpho Blue as the backend for Berachain’s enshrined money market, BEND, adds some intriguing benefits for both Morpho and Berachain. Gauntlet favors this proposal, especially considering @0xloth’s stated support and the quality of the Berachain team.

[Zeebradoom]

[I am a member of Blockchain at Berkeley, but my views do not represent those of the club.]
COOK GO BEARS. No downside, supporting essentially a new launch on Berachain, getting paid.

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[cbb]

Bullish on Morpho and Berachain. In favor too.

[Avantgarde]

Can only join the chorus and say that this is indeed a very interesting and exciting proposal. See no reason not to support this as long as the commercial terms are satisfactory. @Leuts makes a good point re the fee amount, would also be interested to see the figure for comparative purposes.

[Daedalus]

Great proposal indicative of Morpho’s growing market dominance, hope to see more of them in the future. Would like to get more clarity on two things:

1. Can you elaborate a bit on the tokenomics of the Berachain morpho fork? In particular the fee structure and how/if the value accrues back to the $MORPHO token.

2. Also, what would happen to this sanctioned fork if at a later date Morpho decides to launch a canonical version on Berachain?

[Tane]

We appreciate this exciting proposal. We are in favor of this for the following reasons:

• Morpho DAO will gain revenue through a license fee, providing financial benefits.
• By receiving not only USDC but also BERA tokens, Morpho DAO can gain exposure to the potential upside from the success of Bend and, by extension, Berachain.
• The implementation will not demand a significant allocation of resources from Morpho’s core contributors, ensuring that their focus remains intact.

That being said, we are keen to understand the specific terms, such as the exact amount and vesting conditions.
@Berachain-Foundation Couldn’t this information be shared with the public?

[MerlinEgalite]

Thank you, @Berachain-Foundation, for this proposal. This is the first time a friendly fork has been proposed to the community. I’m very excited about it as it is a great acknowledgment of the power of the Morpho Stack.

One of our core values at Morpho is that we’re laser-focused. We try to channel all our resources and efforts toward objectives solely aligned with Morpho’s mission. The fact that the integration support that must be provided is clearly scoped and bounded makes me think this is a great experiment aligned with our values.

I’m sure great learnings will come out of this fork, and finally, the Morpho DAO will share the upsides in case this fork is a success.

For these reasons, I’m supportive of this proposal.

[GFXlabs]

Thanks for this proposal. Several questions/comments:

1. Would any fee switch on this fork accrue to Morpho or to Berachain?

2. We would prefer to see a term less than forever, with an option to renew (with an escalator or other mechanism for predictable valuation)

3. Is the UI solely operated by Berachain? Or is Morpho expected to also include it? Would there be any fees on a Berachain-operated UI?

4. We think rapid expansion to other chains is an important way for Morpho to grow. Because of that, we’d prefer to see a standardized package that can be offered to any chain or interested party, similar to the program Uniswap has where deployments are easy to get, are automatically plugged into governance back on mainnet, and modest grants available to help boostrap. Rather than craft a deal specific to Berachain, we’d rather take this time to create that standardized package so that Morpho can end up across many, many chains with minimal effort on the part of Morpho governance.

[OneTrueKirk]

Per @GFXlabs 's comment, I think it’s a great idea to create a general licensing framework for future use. This can be completed prior to any further licensing proposals, but I do not think it’s necessary to be a blocker here, and appreciate Berachain putting together the first proposal along these lines. Will revert back soon with more thoughts on this.

One other thing to keep in mind is that the IP for the Morpho Protocol code is held by the nonprofit Morpho Association, but the list of allowed usages is specified here and controlled by the Morpho DAO. Therefore, it is appropriate for the Association to be the party finalizing license details once authorized by the DAO to move forward. The Snapshot vote for this proposal can direct the Association to confirm license agreement details before adding Berachain to the allowed uses list.

[Gauntlet]

Following up on our previous comment, we’re excited to share that Gauntlet has been selected as the curator for Bend, pending the proposal’s approval.

We look forward to collaborating with the Berachain and Bend teams and continuing to support Morpho’s growth.

Update: Gauntlet has abstained from this proposal.

[Hubert]

I totally support this proposal: not doing it wouldn’t mean Morpho contribs would have the time to spend to go on berachain, and some other lending market could take the lead. Furthermore, the license fee seems attractive, so the best solution for Morpho holders seems like a no brainer.

[nemoventures]

We are widely supportive of this Berachain licensing proposal due to the alignment with Morpho’s long term mission of being modular, permissionless and immutable backbone of many other Web3 protocols as well as Web2 companies.

Furthermore it seems that a native Berachain deployment by the Morpho team is not on the roadmap and this proposal is about the integration of Morpho into an enshrined app and not a pure standalone deployment.

However we second many of the requests for clarity from other forum members, especially:

1. Clarity on the terms of the deal: how much for the license, for how long support needs to be provided? The smart contracts may live forever, but human capacity has limits.
2. Will Morpho governance & token have a role in this integration or it is a pure infrastructure deal? If the former what is the tokenomics on Bend side? Is there any value accrual planned for $MORPHO holders?