Summary
Reduce MORPHO incentives rates by 30% across all assets and networks; set all assets other than those with ETH or USD denominations to have the same reward rate as BTC-denominated assets. Continue the ongoing reduction in ETH and BTC denominated asset reward rates begun in MIP-86.
Context and Motivation
A month ago, the DAO passed MIP-86, which reduced the general MORPHO reward rate by 20% on Ethereum and applied a further reduction to ETH and BTC denominated assets on both Ethereum and Base. Since then, protocol growth has been strong despite the emissions decrease, while rates on Morpho remain high compared to peer markets. This indicates there is room for further reduction in rates across the board, which can be repeated in the future if these conditions persist.
Rates on Morpho for ETH and BTC denominated assets are especially high, so can benefit from further targeted reduction. Per MIP-86, these assets will reach multipliers of 2/3 for ETH and 1/6 for BTC on February 14.
Assets other than USD, ETH, and BTC have so far not been considered under the multiplier system. While in the future specific multipliers for certain assets may be desirable, such as a dedicated EUR rate, for now they can all be grouped with BTC for simplicity since these denominations do not have a major role for lending onchain.
Details
Implement an immediate 30% rate reduction across Ethereum and Base as follows:
Set the r0 for USD assets on Ethereum to 0.928E-4.
Set the r0 for USD assets on Base to 1.76E-4.
Set the r0 for ETH assets on Ethereum to 0.773E-4.
Set the r0 for ETH assets on Base to 1.467E-4.
Set the r0 for BTC assets on Ethereum to 0.541E-4.
Set the r0 for BTC assets on Base to 1.027E-4.
Additionally, set assets with denominations other than USD, ETH, or BTC to conform to the same r0 (and future multiplier modifications, whether specified in MIP 86 or in this proposal) as BTC assets.
Two weeks after the February 14 conclusion of the current MIP-86 reduction in ETH and BTC asset rates, apply a further reduction by moving to multipliers of 1/2 and 1/10.