To manage the cost of effective liquidity, we propose a comprehensive approach that focuses on maximizing the efficient use of DAO resources—both financially and in terms of contributions from the core team and the community.
We believe that small decisions should be evaluated within the context of a broader strategy, demonstrating the effectiveness of each decision as part of the larger picture.
The optimal configuration we envision is as follows:
A staking module that remains exclusively on Ethereum, including functions such as voting power and reception of DAO fees.
Morpho, as an infrastructure for money markets, aims to be as immutable as possible. Unlike Aave, where security is an internal part of the product, Morpho maintains it separately through curators. This means that deploying Morpho to any chain is not a risk-based decision. Morpho is designed to operate with minimal interference, aiming to keep everything decentralized, permissionless, and naturally evolving. This low-intervention approach highlights the high cost and complexity of sustaining liquidity, particularly as DeFi continues expanding across multiple networks.
Designing a central staking module that concentrates everything the token represents is key to maintaining Morpho’s essence. For other networks (including Base), the DAO should have the option to choose whether and how to incentivize them. This could be through sending MORPHO (as it works today) or perhaps in the future, a portion of the protocol fees.
The distribution of incentives, as rewards for users, would be the only cross-chain functionality of MORPHO. This means users can farm on chains that the DAO chooses to incentivize, but they won’t have any token utility there. The DAO won’t consume resources to achieve deep liquidity or encourage users to hold the token on that chain.
Users who want to use MORPHO functions or find liquidity to sell it will need to migrate the token from the chain they’re using to Ethereum mainnet.
This will keep the focus of efforts, activity, and incentivization for all aspects related to the token on a single chain.
Any strategy that strengthens the needs to 1) incentivize liquidity, 2) encourage long-term holding, and 3) fight voter apathy will be concentrated and unified under a single staking module.