Thank you for the feedback, @OneTrueKirk
We appreciate the opportunity to flesh out our proposal a bit here!
Without giving away too many spoilers, hereās
an abridged version of the current TODO list (scope):
not in any particular orderā¦
A few of our ingredients are implemented as placeholders at the moment.
The most obvious one among these is probably the landing page.
These need to be replaced with improved structures, which are already underway
0.1. The ERC20 mint function uses a fixed price schedule for simplicity and PoC.
The current maturity design (with consideration) allows us to very easily
have 1 month maturity or even 3 years with no extra code, no extra tokens.
But what should the payoffs be for various maturities, considering the aggregate level of demand?
We are playing with a couple hypotheses for this in Python at the moment before
moving them into Solidity. The goal is something dynamic and organic, at least relative what we currently have. Thereās no perfect solution here, no one knows the future. But we wonāt settle for something lame.
0.2. The supplementary / complementary incentives program currently implemented in onERC721Received assumes that weāll get on a monthly Twitter Spaces, share screen, and generate a random seed; then plug that seed into the NFT transfer transaction to operate a lottery. This is better than nothing, but ultimately we would like to not simply leave this to chance. It would be better to host it as some kind of competition format, where the best effort wins (no buying votes like JokeRace). Half of our team is currently dedicated to researching solutions around this.
Our governance function _calculateMedian can be parameterised.
As in, itās possible to use the same logic to vote for multiple values,
not just one as we currently have it hardcoded. What values are there?
A few of gradients:
1.1 The level of minimum level of collateralisation that is still acceptable for the protocol to issue insurance coverage payoff hedging delta in ERC20. Similarly, there are mint caps for various maturities. Currently hardcoded at 1 year maturity, up to 777,777 per day (paying homage to the address of the old Morpho-AAVE optimiser).
1.2. To what extent should the size of the deductible should change relative to the size of the delta being hedged (measuring end-usersā individual preference together with aggregate utilisation)? Just like the process with our mint function, we are currently playing with solutions for this in Python. There are many ways to solve it, none of them particularly wrongā¦we prefer not to over-complicate thingsā¦but there is a goldilocks zone that we still havenāt quite found (yet!)
1.3. The Morpho USDC vault we currently integrate is hardcoded; may be useful to allow the vault address to be modified. More on that train of thought: our morph function, the largest in the ERC20, is currently hardcoded to use SUSDE as collateral for emergency borrowing. Like I mentioned in our original post, itās useful to tap into multiple markets according to some community-designated preference. This would involve possibly having to deploy those markets ourselves (weāve already deployed a SUSDE market on Base).
1.4. Finallyā¦the stablecoins that come in to the protocol can enter in any proportion the market sees fit. But once theyāre inā¦it is what is, and itās not what itās not. Thatās a bit concerning, so it would be nice to allow some form of reallocation possibly.
A simple node.js script / service which will continuously call the fold function. Itās not āthatā easy, thereās a bit of calculation involved (optional optimisation). fold deals with liquidation / insurance coverage hedging logic. This caller script can also act as an indexer for the website, so we can show pie charts for all the important events / metrics. We will try to include some optimisations in regards to MEV, with advice from our friends at Manifold, but this isnāt strictly necessary.
Weāve received an audit quote from Hacken, and have done our due diligence on the team. After much experience as auditors ourselves, and having received audits in the past, we are very picky with whom we decide to collaborate. The quote exceeds the ticket we requested for this Morpho grant, but we will try to negotiate a mutually beneficial deal to move forward, bringing us to our final TODO item: close to full test coverage including the latest from our esteemed colleaguesā¦
Very soon, USDS and SUSDS will be available on Arbitrum, and the new FRAX contracts are going to be launched. Integrating these into our final mainnet deployments will super easy. Something a bit non-trivial, though, which we are currently exploring, is turning our ERC20 into a GHO facilitator. GHO already has Uniswap pools with a decent amount of liquidity, so it saves us the trouble of putting those into place. Besides, who needs another random ERC20 right? I like the word āquidā a lot, but itās whatever. What is needed, however, is aligning everyone around a thought experiment that has symbiotic properties benefitting all involvedā¦so that is our ultimate pursuit: knightsā roundtable where we can forget about competing and all learn together, pushing the needle forward collectively for the industry.
Am I forgetting anything? We are always open to feedback, constantly researching and reading. No idea is too small, no negative feedback too insulting. Quality is what we worship, by any means necessary. It would be cool to host a few book clubs together like this one.
Thank you for your feedback @OneTrueKirk. Iām happy you share our enthusiasm for what you aptly call borrower vaults.
We understand your concerns about distribution and have already made significant progress in addressing them. MORE Markets is still in its early stages and is only launching today on Flow mainnet in fact. We are already equipped to begin building TVL and have a strong partnership with both the Flow Foundation and Trident to do so. Both organizations are supporting our go to market with a significant liquidity provision that will ramp up slowly over the next 3-4 months and is expected to represent the mid 8-figure range. While MORE Vaults would be an addition to the stack weāre building, the team and our partners are highly confident that weāll be able to achieve the metrics we communicated specifically about MORE Vaults.
In addition to securing a liquidity provision, we also are working with 2 upstart curators that are preparing to deploy the initial MORE Vaults. I hope this information adds sufficient clarification to our proposal and that the community gains additional confidence in our approach to making this project a success.
Regarding Point 3 - It is a good point you highlighted. We could leverage the Morpho Blue API if itās available, which would be the most straightforward approach.
But weāre also totally flexible - we can set up our own indexer using the deployed subgraph, or if needed, we could even handle data caching directly from the RPC. (Whitelabel solution guide will include exact scripts and steps about doing that)
Weāre happy to include any of these approaches in our proposal and make it a detailed one.
Hi, thank you for the feedback, itās a great point and aligns with a direction we see as valuable since beyond being reusable for others, such a mechanism would also ensure, from a media standpoint, that we are not dependent on a single curator, which is key to maintaining independency.
For now, our focus is on building an MVP to test this on-chain subscription model. Starting with a dedicated vault where fees are shared with TBW allows us to validate the concept before scaling.
Some additional tools, such as mechanisms to prevent immediate deposit ā read ā withdrawal behaviors, as well as other subscription-specific features, will be developed later. I see this broader feature as highly relevant at that stage.
For the MVP phase, weāll only allow the safest assets (cbETH, wstETH, cbBTC) to ensure maximum stability and security for subscribers. That said, our approach isnāt entirely closed. We plan to allow subscribers to use the deposit token to vote and propose adding exposure to other assets and markets. Expanding this into a more generalized, reusable fee-splitting mechanism once the model has proven to be of interest for subscribers and the media
Thanks again for bringing this idea, and happy to answer any questions the community might have regarding our proposal.
Thank you, @OneTrueKirk, for reviewing the proposal.
Can you clarify what a quality of 8/10 refers to? It would also be helpful to provide some clarification about the level of usage observed on your previously created products, and how the impact of the product could be objectively measured
We have a ratings feature. With our ratings feature, we can ensure that the tidbits and simulations will consistently achieve a rating of at least 4/5. Previously, we used ratings for Fuse, and the results are visible on the dashboard.
The amount of traffic significantly depends on where we list the Tidbits Hub. Therefore, we would prefer it to be featured on one of Morphoās main pages.
Tidbits was built by DoDAO , who showed an extreme dedication to detail and understanding alAssets. The project was funded through the Alchemix grants program
Thank you for your review and insightful feedback on our proposal.
We understand your concern regarding the initial one-month operational commitment. We acknowledge that this may not be sufficient to fully justify a grant award. Originally, we had considered a shorter commitment as a way to quickly validate community interest and gather feedback on the dashboard. However, we recognize that this may leave the community in a difficult position. We want to reassure the community that we are fully committed to provide value for the funds received.
Therefore, we have revised our operational commitment to ensure the dashboard remains available online for one year, provided that the dashboard reaches its objectives and we receive the remainder of the grant requested. This extended commitment will allow ample time for borrowers to benefit from the tool and for the community to assess its long-term value.
We also greatly appreciate your observation about the need for a self-sustaining business model. This is an area we are actively exploring, and your feedback is very valuable to us. As we are new to evaluating business models in DeFi, we acknowledge that there are many alternatives to explore. We are now open to the idea of adding a premium tier with enhanced analytics and possibly borrower automation tools in the future. However, our immediate priority remains the delivery of the core dashboard functionalities for all Morpho borrowers within the one-year commitment.
Thank you again for your constructive feedback. We believe that this will allow us to provide a more robust and valuable tool to the Morpho ecosystem. We are committed to the long-term success of this project and are open to further dialogue with the Morpho community.
Dear delegates,
Please note that as explained here we have updated the dashboard operational commitment in our proposal to one year.
Sincerely,
Beta Sigma Team
Thanks for the feedback. Here are some further clarifications to give a better context:
The mechanism is intented for large scale usage rather than for use by individuals. Even though it is completely possible for someone to operate their own personal Yieldstream vault we donāt expect a large amount of users to show interest on that front. We intent to offer a small selection of low-risk options for users interested in our offering.
The ability to curate vaults exists for the reason that we have demand from third parties inside and outside of the defi space for our infrastructure which is highly encouraging. Since we are focused on our own offerings we want to offer a mechanism that allows these third parties to operate independently on our platform and therefore the fee mechanism was implemented to onboard these users. It was not part of the original design.
The real point of differentiation in this design is the circuit breaker mechanism. Yieldstream offers an additional layer of protection for users as the protocol is designed to react in real-time to losses. This is what really sets us apart and we believe itās a useful innovation for the defi space.
Thanks for the feedback! Weāre thrilled with the opportunity to integrate two great protocols like Morpho and CoW.
By the way, we also posted a second proposal. I am unsure if this feedback is regarding both of them or just the first one (Hooks) and you will still review the second one (Stop Loss). Can you confirm that for me?
Liquidity providers earn attractive yields by depositing USDC to collateralize protection contracts. Their position mirrors the payoff of a cash-secured put strategy: they collect regular premium payments while gaining the opportunities to acquire the underlying assets (BTC, ETH, or SOL) at a discount from initial market prices. Unlike puts where settlement involves asset delivery, providers maintain USDC positions throughout, with returns tied to the price movements of the underlying assets. This structure appeals to liquidity providers who have a bullish medium- to long-term view on crypto markets seeking substantial real USDC yields.
Thanks for the feedback, as for the distribution plan - the open-source liquidity indexer from Tycho will be just a first step on our integration roadmap. Due to its permissionless design, this way we will be able to bootstrap the initial trading volume that will showcase our LPs yield potential of this optimized solution.
After that, we plan to integrate with the Enso solver network, which has more than 180 integrated protocols and solvers. Once ready, via personal connections, we will also directly integrate with CoWSwap Protocol solvers (~25 at the moment) to capture as much trading flow as possible.
So, the integration plan is :
Tycho - the open-source liquidity indexer
Enso solver network
Direct integrations with solvers
As these solvers and layers provide liquidity for both CoWSwap and Uniswap meta-aggregators - we will be widely integrated within the DEX ecosystems, ensuring receiving the sustainable trade flow required for the long-term success of our solution.
The appās dedicated ranking page tracks user activity and helps us measure the appās success on the spot: Ranking Page. Early traction will be reflected as:
New wallets populate the leaderboard.
Existing wallets accumulate more discounted ETH.
Each new entry or activity creates opportunities for promotion on social media, driving further user engagement.
For Morpho, ETH Discount directly contributes to TVL growth:
Every discounted WETH purchase adds 1:1 WETH to Morpho vaults.
Spectra pools, which ETH Discount relies on, channel 85-95% of their TVL into Morpho, creating a robust liquidity pipeline that ETH Discount amplifies through user activity. Itās a separate TVL inflow in addition to standalone purchases.
This grant will help us determine whether discounted assets, like āETH at a 5% discountā or āUSDC at $0.90,ā can become a new DeFi vertical or even get implemented by CEXs as a new product for the end users to āearnā with, alongside, e.g., staking. Success metrics include:
The volume of discounted assets traded.
The number of active wallets on the platform.
Fees generated for Morpho from increased Spectra pool activity, originating from ETH Discount
ETH Discount was built with significant Spectra support, including wETH pool setup and seeding liquidity. The app is fully live, and the audit is the final step to validate its potential to establish discounted assets as a viable sector and a revenue generator for Morpho.
We find this proposal highly appealing for Morphoās growth, given CoWās significant trading volume and its potential to channel deposits into Morpho in just a single transaction.
While users might still have to revisit Morpho later to check/manage their positions, the reduction in onboarding friction alone offers clear substantial value.
We also have confidence in the teamās track record, who have had several CoW-related developments, and appreciate the clear milestones and metrics provided.
We find this proposal extremely compelling for the following reasons:
Capital efficiency is a fundamentally important issue throughout DeFi including Morpho, and Twyneās approach to boosting capital efficiency is particularly unique.
From a userās perspective, the benefits appear straightforward and highly valuable.
The milestones and impact metrics are clearly stated and measurable.
The teamās background is strong, lending credibility to the project.
We do, however, have two key questions:
Based on the statement below, we would like to clarify whether the improvement in capital efficiency is limited to specific vaults, or if any vault can benefit from Twyne, depending on the curatorsā configuration.
Is there an upper limit on how much credit a borrower can receive via delegation?
Intuitively, such a limit seems necessary; without it, a borrower might walk away from repayment after their own collateral is liquidated.
We would like clarification on how Twyne enforces reasonable delegation limits to prevent abuse.
Thank you in advance for your response. We look forward to learning more.
We strongly support this proposal for several reasons:
First, the issue it addresses is a critical topic that has been widely discussed in the DeFi space. While there are multiple reasons why LP token usage in lending hasnāt been widely adopted yet, this solution is definitely a step in the right direction. As Kik pointed out, there is a huge potential market for LP token lending.
The value proposition is powerful: enabling LP tokens to generate yield while also being used as collateral to borrow other assets is a significant advantage.
We also have confidence in the team, as they have proven experience with the ecosystem around Curve and Convex, which further strengthens our support.
The provided milestones and metrics are clear, and the requested budget appears to be reasonable.
That said, we do have some concerns regarding the scalability of the solution (, although this will not impact our vote considering the grant amount.)
For instance, Curveās 3pool LP token has relatively stable price and the ability to increase rewards through veCRV. This makes the purpose of building a Morpho wrapper quite clear. However, when it comes to using LP tokens from other pools or different DEXs as collateral, challenges such as oracle design might arise. We feel that it will take a few more steps to fully enable the effective use of this factory for a broader range of assets.
We would love to hear any further insights on this matter.
@OneTrueKirk
We suggests to ensure each proposal has a clearly defined timeline for measuring objective metrics, and tie grant payouts to results based on that specific timeframe.
Grant payout is determined as below:
It appears some proposals define their objective metrics without setting a specific deadline or measurement period for when these metrics must be achieved.
Would it be possible to require each proposal to include a clear, time-bound target for its objective metrics, so that the final payout can be determined more concretely based on whether those targets are met by the specified deadline?
We anticipate that small yet important points like this will continue to arise in the future. Drawing on our experience from other DAOs ā such as our work on the Optimism Grant Council ā and our deep understanding of the Morpho context, we are committed to actively contributing to this community.
a) Vault Applicability : In the first iteration, improvements in capital efficiency will be limited to specific vaults with sufficient liquidity and fitting risk parameters. Weāre open to working with the community to ensure that this approach doesnāt overly favor certain risk curators over others, though we recognize this is a complex issue. Assistance from Morpho governance might be valuable in developing a blueprint to address it. @OneTrueKirk
In the future, we plan to adopt a structure similar to Morpho, allowing risk curators to permissionlessly deploy credit-vaults.
b) Credit Delegation Limits : Borrowing limits are tied to the collateral deposited. We ensure loans remain over-collateralized. For instance, if a Morpho vault allows an 80% LLTV, the remaining 20% serves as a buffer. Twyne v1 enables borrowing against this buffer, backed by other users borrowing power. While uncollateralized loans are possible with credit delegation, this introduces complexity and isnāt our current focus.
