Morpho Staking Mechanism to Drive Value and Engagement

To introduce a staking mechanism for MORPHO tokens that incentivizes long-term holding, enhances community participation, and aligns rewards with the protocol’s growth, driving increased token utility and value.

Proposal Details:

  1. Staking Vaults with Dynamic Rewards

Create staking vaults where MORPHO token holders can lock their tokens to earn rewards. The rewards will be tied to specific performance metrics or vault categories, ensuring alignment with protocol growth.

Vault Categories:

Core Vaults: General staking vault with rewards based on the protocol’s revenue or transaction fees.
Performance Vaults: Vaults linked to specific Morpho initiatives, such as adoption on major platforms (Aave/Compound integrations), or governance participation rates.
Thematic Vaults: Vaults aligned with specific community goals, like liquidity pools for specific DeFi projects utilizing Morpho.

  1. Reward Mechanism

Reward stakers based on:

Protocol Fees: Share a percentage of the fees collected by the protocol.
Governance Participation: Bonus rewards for active voters and contributors in governance decisions.
Time-Locked Multiplier: Longer staking durations unlock higher multipliers, rewarding commitment and reducing token sell pressure.

Rewards can be distributed in:

MORPHO Tokens: For governance participants and long-term stakers.
Partnered Assets: Partner with other DeFi protocols to reward stakers with stablecoins, ETH, or project tokens, creating cross-protocol synergy.

  1. Fee Sharing Model

Introduce a Fee Switch Vault:

When fees are collected from Morpho smart contracts (if enabled via governance), a portion is routed to stakers as rewards, creating a direct link between protocol success and staking incentives.

1 Like

good proposal, I want to mention that locked tokens (from VC / teams) should not be allowed to be staked