MIP - MORPHO rewards Age 5

MIP - MORPHO rewards Age 5


The purpose of this post is to define the framework for the distribution of rewards for Age 5 starting on May 22nd and ending on July 6th. We propose to:

  1. Distribute a total of 1.1 million $MORPHO;
  2. Focus rewards distribution on markets where peer-to-peer matching is activated;
  3. Start incentivizing the supply side of the WETH market on the AaveV3-ETH Optimizer.


As a reminder, the previous Age scoped the length of Ages, and reduced rewards emissions. The rationale behind the latter was that the bootstrapping phase of CompoundV2 and AaveV2 optimizers could be considered over and that they could now rely on organic growth as they offer natively better rates than their counterparts.

We suggest cutting rewards in markets where peer-to-peer matching is disabled to focus on markets where Morpho has a clear added value. Moreover, we propose a decrease of 30% in emitted rewards on assets where P2P matching is enabled.

Age 4 has also seen the launch of the AaveV3-ETH optimizer. It represents a significant use case in ETH borrowing with very competitive rates. Incentivizing the supply side could unleash strong growth potential.

Applying the same model as in previous ages (detailed in this forum post) to compute the distribution of rewards but setting markets with P2P disabled to zero and integrating AaveV3-ETH Optimizer, the markets would receive the following shares of rewards during Age 5:

Optimizer AaveV2 CompoundV2 AaveV3-ETH
Weight 5.77% 45.87% 19.06% 9.45% 10.14% 2.74% 6.97%

The allocation of rewards between the supply and borrow side for a given market would follow the repartition of supply and borrow on the market at the beginning of the Age, except for WETH on AaveV3-ETH where it will be focused on the supply side to bootstrap liquidity available for matching.

Next Steps

After discussions with the community, we will push a vote on Morpho’s Snapshot.



nothing to say about the gauges optimized distribution which is made to improve the efficiency of the rewards distribution.

Although the main appeal of Morpho is its advantageous rates, the distribution of $MORPHO is also at the heart of the vision of clear decentralisation which is expressed here (DAO Infrastructure - Morpho General Documentation)

With rewards dropping at every Age, in line with the bootstraping phase of the protocol considered over (totalling 2.8% of the total supply at the end of the Age 5 if the latter is voted), the question arises (already did) as to what the association’s vision is for the tokenomics of $MORPHO?

Too early? (:

Morpho allocation


Hello @albist! Thank you for your comment; it is highly appreciated.
$MORPHO emissions generally have 2 main calls:

  • Bootstrapping network effects: in this case: the liquidity available for matching can start to grow, then enabling organic usecases.
  • Decentralization: In our vision, a good equilibrium for the control of a DAO is a clear distribution between
    1- Users: owning a share of the network to provide feedback on the product.
    2- Contributors: to keep improving and building based on that feedback + on their technical vision (at least at the beginning)
    3- Investors: to provide capital and guidance and fuel those contributions and ecosystem.

Morpho’s ambition is to become the most secure, efficient, and open decentralized lending protocol. This vision goes way beyond Morpho’s Optimizer’s first product that is currently being released.

The DAO has more than 50% of all tokens to distribute across the next iterations of the protocol. $MORPHO being the scarcest resource of the DAO, it is important that it is extremely carefuly distributed across the existing and future protocols.

Furthermore, while emissions have been reduced, usage keeps going up. This means that either the price estimation of the MORPHO token has risen or that the product itself is good enough for it not to emit that many tokens.

For comparison, Aave emitted ~ 4,4% of AAVE Total supply during their incentives program.

TLDR: Emitting too many $MORPHO too quickly, the DAO would be centered around the first protocols that are just the beginning. Moreover, the protocol seems to have reached Product-Market-Fit, which makes it even less relevant, hence the reduction.