Summary
Reduce MORPHO reward rates by 25% on Ethereum and Base.
Context
The last MORPHO rewards rate reduction took effect on January 30. Since then, protocol growth has remained healthy and rates competitive. Overall Ethereum mainnet lending TVL has dropped by ~8% in the last month, but Morpho has continued to grow. It is the only Ethereum lending protocol with over $1B TVL and positive monthly growth on mainnet.
The current yearly emissions rate is as follows:
Ethereum: 15,641,246.64 MORPHO/year
Base: 4,246,688.08 MORPHO/year
Total: 19,887,934.73 MORPHO/year
This represents an expenditure of ~$43.5M per year at the current MORPHO price.
Proposal
This is a proposal to reduce the MORPHO reward rate on Ethereum mainnet and Base by 25%. It is the third progressive reduction in MORPHO rates proposed since December.
The Morpho Association will continue to recommend progressive rate decreases so long as rates on Morpho remain competitive with peer markets and growth is healthy following reductions. Subsequent proposals will likely have smaller cuts over time, with the goal of a gradual phasing out of rewards on a flexible timeline that is responsive to market conditions.
Next Steps
If this proposal passes, the 25% rate cut will be implemented as soon as is technically feasible.