MIP - Depreciate FEI Market


A new conversation to depreciate the Compound FEI Market was kicked off in the Compound governance forum. We suggest that Morpho follows a similar path to start the depreciation of the FEI Market.

Morpho’s matching engine was deactivated to limit unuseful P2P matches.

Action plan

Step 1.

The current FEI market is very illiquid due to the situation. We encourage anyone to repay their FEI debt right now to unwind the market properly. According to Compound’s governance, one can expect very high borrowing interest rates as they can increase the reserve factor.

To favor the liquidity of the FEI market, the latter will be partially paused on Monday, September 5th with the Morpho Operator Multisig. It means that borrow and supply operations won’t be authorized from this date.

Step 2.

As the FEI Market is depreciated on Compound and Age 1 comes to end. A vote on Snapshot will decide if the market should be removed or not. Morpho Labs will be in favor of the depreciation if it is indeed planned on Compound.


As planned, the supply and borrow has been paused on the FEI market on Morpho (tx). The Compound governance is going to pause the borrow, and set the reserve factor to 99% (proposal).

We still encourage anyone to repay their FEI debt as quickly as possible.


Compound governance is discussing about the right time to deprecate the FEI market (discussion). Morpho will also have to deprecate the market, meaning that all the FEI debt would be liquidatable, regardless of the collateralization of the position. Audits are currently ongoing for this, it should be ready in a few days. There is no precise date already planned for its activation, but keep in mind that Morpho’s deprecation of the FEI market should be done before Compound’s deprecation.

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The FEI market has been deprecated on Compound (proposal). Almost all FEI suppliers on Morpho had already had the opportunity to withdraw, and there is only $26 left on the market. We will wait a little bit to remove the market from the front-end anyway.

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Now that Morpho-Compound has been upgraded to include a deprecation feature (see the forum post and proposal), we can move forward on the deprecation of the FEI market. Morpho Labs will push a proposal in the next few days.

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Votes are open, until Dec 29 !

The proposal passed, and the FEI market has successfully been deprecated (tx).

Note that the total borrow was $0 and not $26 as stated in the proposal, so it made no accounts liquidatable.