# Supporting MORPHO token liquidity on DEXs **URL:** \ **Category:** Governance\ **Created:** [October 7, 2024, 3:31pm UTC](https://forum.morpho.org/t/supporting-morpho-token-liquidity-on-dexs/847 "2024-10-07T15:31:56Z")\ **Posts on this page:** 1\ **Showing post:** 1
**Author:** ![aseem](https://avatars.discourse-cdn.com/v4/letter/a/a8b319/32.png) [@aseem](https://forum.morpho.org/u/aseem)\ **Post date:** [October 7, 2024, 3:31pm UTC](https://forum.morpho.org/t/supporting-morpho-token-liquidity-on-dexs/847/1 "2024-10-07T15:31:56Z")
As we are discussing upcoming token transferability event, we also need to support the launch via liquidity on CEXs and DEXs. Morpho Association has expressed confidence that they can reach market makers on CEXs through their existing connections but a DEX strategy is less clear. This post discusses ideas for a DEX strategy and recommends a path forward. ### Goals - Ensure ample liquidity depth in a DEX, with reliable, low-slippage price execution, on both Mainnet and Base - Set up an on-chain oracle with quantifiable economic manipulation costs - Enable a Morpho Market to use MORPHO as collateral ### Ideal Scenario If we could snap our fingers and magically solve all three of the goals above, it would probably look something like a deep pool on a DEX that is backstopped by the DAO’s liquidity and provides a built-in oracle that is (gradually) economically-impractical-to-manipulate. Unfortunately, this is difficult to achieve today for various reasons: - For the DAO to create a deep, wide-range position in a DEX, it needs the “other” token: WETH or a stablecoin. How does it acquire that without an explicit sale? - Except in pools with extremely deep liquidity (like ETH-USDC-5bps), Uniswap v3 Oracles are economically manipulatable. Uniswap v4 with Hooks will provide a new platform to explore better oracle designs like a Truncated Oracle. However, v4 timing is still a few months out. - Lastly, MORPHO markets can’t be created unless there is a reliable oracle. Which requires a healthy market of trades for the token. Chicken and egg problem. Given that the timeline for token transferability is sooner than than Uniswap v4 launch (not to mention additional time beyond the launch to battle test the new protocol), here’s a simpler proposal for DAO’s consideration. ### Proposal In lieu of Uniswap v4 and without an easy path to acquire the “other” token, we recommend a liquidity mining program on Uniswap v3. - Identify a single pool (ex: MORPHO-WETH-30bps) on Mainnet and Base - Set aside MORPHO tokens (amount TBD) over 6-12 months to incentivize in-range liquidity - Setup an off-chain script to calculate rewards and allow periodic claims (either through Morpho App, Merkl or another frontend) ### FAQ **Q: Why do we need to use an off-chain script, instead of Uniswap v3 Staker?** Unfortunately, the Staker has been shown to be trivially gameable: [https://medium.com/@revert\_finance/onetickdao-eth-and-the-narrow-rangers-f9a376f7f0c9](https://medium.com/@revert_finance/onetickdao-eth-and-the-narrow-rangers-f9a376f7f0c9) via flash liquidity. With off-chain calculations, we can setup parameters like minimum range to discourage one tick wide liquidity positions or require positions to exist for more than X blocks to reward long term providers. **Q: How do we figure out how much rewards to give and for how long?** We request comments on the optimal reward allocation. Gauntlet has experience in this area, and others are also encouraged to give input. **Q: What happens after this program ends?** After 6-12 months, we believe Uniswap v4 will have launched and had a few months “bake-time” so we can explore other ideas mentioned above. In addition, projects like [Doppler](https://x.com/AustinAdams10/status/1833505856056660026) that are built on top of v4 can also be considered. **Q: Could we not use a Morpho Market to source the “other” token?** That would be amazing. We can imagine a setup where Morpho DAO locks up a portion of its token in a Morpho Market, borrows against them and adds it to the DEX in a wide-range position. It could use the LP fees to pay interest to Morpho Market or over time start accumulating the “other” token for its use. Unfortunately, this requires a price oracle - thus an already existing market for the token. Chicken and egg again. – Thank you and looking forward to feedback from the community. PS: As it’s my first time posting, I was limited to two links in the post :). Happy to provide links out via replies. --- _[View the full topic](https://forum.morpho.org/t/supporting-morpho-token-liquidity-on-dexs/847)._