MIP 99 - Phase 2 - Frontend for Compound <> Morpho <> Polygon Collaboration

Governance
1

Summary

Compound.blue launched on March 13 and surpassed $20 million in TVL within its first week.

Office Supply Ventures LLC (“OSV”), an affiliate of Paperclip Labs, is pleased to act as technology partner to the Compound <> Morpho <> Polygon collaboration. To further strengthen the project, OSV proposes to implement the community’s vision for the next phase of Compound Blue by introducing:

  • AAVE v3 Position Migrator
  • AAVE v3 Liquidity Migrator
  • Creating Leveraged Positions

These enhancements will allow users to easily migrate their AAVE liquidity, and provide leverage strategies for higher yield opportunities. All features will be integrated in the existing Compound Blue open source repository.

Scope

Features

  1. AAVE v3 Position Migrator: Allows migrating exact positions into Compound Blue

  • Phase A - Vault Migrator: Users will be able to migrate their assets supplied to AAVE v3 which are not used as collateral into the Compound Blue vault with the matching underlying asset.

  • Phase B - Market Migrator: Users will be able to migrate collateral and borrow pairs into Compound Blue markets with the matching assets (similar to Fluid’s migration interface). The user will need to select amounts that ensure both AAVE and Morpho positions are healthy.

  1. AAVE v3 Liquidity Migrator: Users will be able to migrate their entire AAVE v3 liquidity into a single Compound Blue position by selecting their portfolio % and destination position (lend or borrow). This guarantees to leave the AAVE portfolio healthy or fully removed.

  2. Creating Leveraged Positions: Users will be able to specify their supply collateral amount, and leverage factor to create leveraged borrow positions for more aggressive strategies and boosted yields.

Scalability

  • Data Infrastructure: All data will continue to be powered by custom endpoints in Whisk, a data indexing and delivery tool that provides real-time, scalable data optimized for DeFi.
  • New Vault and Markets: The system will be designed to support additional vaults and markets in future iterations, ensuring adaptability to the project needs.
  • Testing: Unit and end-to-end testing will be added to cover key aspects of the Compound Blue application.

Hosting, Maintenance & Support

All features will be added within the existing compound.blue website. Upon completion, an additional 1 month of post-launch support will be included as outlined in MIP-96. At the end of this period, long-term sustainability will be evaluated to determine the best path forward.

Open Source

The source code for the frontend will be open-sourced under the AGPL-3.0 license to ensure transparency, and serve as an example for the Morpho community.

Alignment with Morpho

The updated frontend will strengthen the Compound <> Morpho <> Polygon collaboration by enhancing user accessibility and engagement. By incorporating migration and leverage, OSV aims to execute on the community’s desire to expand Compound and Morpho’s presence on Polygon, driving new deposits, lending, and borrowing activity. These improvements will also benefit the Morpho community by providing more open-source tools that allow other teams to integrate these features out of the box. This approach not only supports Morpho’s ecosystem but accelerates adoption by making key functionalities more accessible for all users.

Funding Request & Delivery Schedule

We are requesting $80,000 USD for this proposal, with the following deliverable schedule:

  1. March 28: AAVE v3 Position Migration phase A (1 week)
  2. April 4: AAVE v3 Position Migration phase B (1 week)
  3. April 9: Leveraged Positions (0.5 week)
  4. April 23: AAVE v3 Liquidity Migration (2 weeks)
  5. April 30: Completion of e2e and unit testing (1 week)

We are also requesting an additional $20,000 USD to cover the difference in target amount ($52,000) vs realized value (<$32,000) from MIP-96, where the TWAP was tied to the governance vote, but the actual payment was delayed due to a Morpho internal security freeze following the Bybit hack.

All payments will be made MORPHO using the 7-day TWAP at the time of disbursement.

3 Likes
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I want to emphasize that in general, the DAO should not be responsible for any difference between TWAP prices as voted and the final realized value received by grantees. However, given that a large delay was caused by the Bybit hack, and the quality of Paperclip’s work on compound.blue has been high, it makes sense to me to proceed with the additional funding in this case.

In the future, all grantees are recommended to propose a TWAP price based on the time that the disbursement transaction is submitted to the multisig, rather than at the time the voting concludes, to ensure this problem does not recur. If they fail to do so, they will be considered responsible for the shortfall.

One clarifying comment : since it is not possible to guarantee that disbursement will occur on the same day that a payment tx is submitted for signing, we can understand the language “at time of disbursement” to mean “at the time of creation of the payment transaction”.

Overall, I am very supportive of this proposal. It’s worth noting that analysis indicates Fluid’s migrator tool has seen substantial usage in bringing liquidity from Aave on Polygon to their deployment, and Compound x Polygon have just launched borrow incentives for the CompoundxMorpho vaults, so it is timely to fund this development. Furthermore, we have seen substantial interest from lending market teams and chains in leveraging the open source Paperclip frontend to build on the Morpho stack on new networks, so I believe the benefit to the DAO of this resource allocation will be substantial.