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Use the following paragraphs for a longer description, or to establish category guidelines or rules:

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In 2024, the Morpho DAO voted to establish a yearly process to approve contributor grants. Following this vote, the Morpho Association presents yearly allocations to the Morpho DAO for final approval and distribution to contributors. The goal of this post is to review 2025 grants. Note that this proposal is a ratification of grants from the previously allocated reserve, not a net new funding request.

2025 Review

The Morpho Association presents the following token grants, for the period between January 1, 2025 and December 31, 2025.

During this period, contributors worked on:

• Product & Engineering - The development and maintenance of several applications and developer experience tooling including:
  • app.morpho.org
  • curator.morpho.org
  • liquidations.morpho.org
  • Morpho API
• Protocol:
  • Development and launch of Vaults V2
  • Development of Morpho’s fixed rate protocol (to be released in 2026)
• Business
  • Total deposits grew to $13B at ATH
  • Adoption of RWAs to $800m
• Integrations:
  • Tier 1 Exchanges: Coinbase, Crypto.com, Gemini, Bitget, Bitpanda, OKX
  • Wallets: Ledger, Trust Wallet, Safe
  • Qualified Custodians: Anchorage, Taurus

The overall distributions for 2025 are presented below:

Next Steps

After the community has had time to discuss, the Morpho Association will submit the vote on Snapshot for the DAO to approve 2025 distributions.

We’re excited to announce the launch of the sky.money USDT Savings Vault, expanding sky.money’s curator presence on Morpho with a new vault designed to attract deep USDT liquidity and enable efficient USDS/USDT lending. We are also announcing the USDS Flagship Vault, a new vault offering USDS depositors a risk/reward profile above vanilla sUSDS — combining the Sky Savings Rate yield with targeted exposure to blue-chip lending markets.

sky.money USDT Savings Vault

This vault accepts USDT deposits and deploys them into the existing sUSDS / USDT Morpho market — a deep, battle-tested market with over $133M in liquidity.

Rather than launching a new market, the USDT Savings Vault plugs directly into an established sUSDS/USDT market (LLTV: 96.5%), providing immediate access to existing liquidity and utilization. This approach allows depositors to earn yield from day one while preserving conservative operational risk management.

Vault yield is driven by market utilization and borrowing demand, with additional USDS rewards distributed to depositors during the launch phase via Merkl.

sUSDS / USDT Market

The sUSDS / USDT market allows users to:

• Deposit sUSDS as collateral
• Borrow USDT against it at an LLTV of 96.5%
• Enable looping strategies that increase demand for sUSDS and deepen USDT liquidity

The market uses Morpho’s adaptive interest rate model and already benefits from established liquidity at launch.

Rewards & Incentives

At launch, Sky is providing USDT incentives via Merkl to bootstrap liquidity and reward early depositors. Incentives are continuously distributed, with amounts set on a weekly basis:

• Week 1: 50,000 USDT
• Week 2: 50,000 USDT
• Week 3: 25,000 USDT
• Week 4: 25,000 USDT

sky.money USDS Flagship Vault

This vault accepts USDS deposits and applies a structured allocation strategy: 80% of deposits earn the Sky Savings Rate (SSR), distributed via Merkl, while 20% is actively allocated across a curated set of Morpho lending markets.

The vault is managed by an allocator bot under on-chain constraints — capping total market exposure at 20% of vault assets and limiting any single market to 5% — ensuring withdrawal liquidity is preserved at all times.

Vault yield is driven by a combination of SSR rewards and market lending returns, with additional incentives distributed during the initial launch phase via Merkl.

stUSDS / USDS Market

The stUSDS / USDS market allows users to:

• Deposit stUSDS as collateral
• Borrow USDS against it under an LLTV of 86%
• Benefit from a deep, existing market reused from the USDS Risk Capital deployment

wstETH / USDS Market

The wstETH / USDS market allows users to:

• Deposit wstETH as collateral
• Borrow USDS against it under an LLTV of 86%
• Access ETH-backed leverage while contributing to USDS lending depth

WETH / USDS Market

The WETH / USDS market allows users to:

• Deposit WETH as collateral
• Borrow USDS against it under an LLTV of 86%
• Participate in ETH-collateralized borrowing against USDS

cbBTC / USDS Market

The cbBTC / USDS market allows users to:

• Deposit cbBTC as collateral
• Borrow USDS against it under an LLTV of 86%
• Access Bitcoin-backed leverage within the Sky ecosystem

All markets use Morpho’s adaptive interest rate model and are seeded to ensure healthy utilization at launch.

Rewards & Incentives

At launch, Sky is providing USDS incentives via Merkl across the vault. 80% of deposits earn the SSR passively, while active market allocations generate additional lending yield. Incentives are continuously distributed, with amounts set on a weekly basis:

• Week 1: 50,000 USDS
• Week 2: 50,000 USDS
• Week 3: 25,000 USDS
• Week 4: 25,000 USDS

It’s been a minute! Since our last session in December, the ecosystem has been moving fast, and we are thrilled to kick off our first governance call of the year. Whether you’re a long-time delegate or a new community member, we want your voice in the room as we set the tone for 2026.

Mark your calendars for Thursday, March 05.

Pro Tip: Never miss a beat by subscribing to the Morpho DAO Governance Calendar.

Logistics

• Date: Thursday, March 05, 2026
• Time: 17:00 – 18:00 UTC
• Meeting Link: Join the Call Here
  (The link is also available directly in the governance calendar!)

The Agenda

We’re keeping it focused but high-impact for our comeback session:

1. Association Updates: Fresh insights into what’s been happening behind the scenes and 2026 roadmap.
2. Open Discussion: The floor is yours to bring ideas, questions, and feedback to the DAO.

Join the Conversation

• Have a specific topic in mind? We want to hear it! Please post in this thread if there’s something you’d love to discuss so we can update the agenda and give it the time it deserves.
• Can’t make it? No worries—we will be recording the session and publishing it afterward for public review.

We’ve missed the energy of these calls and can’t wait to see everyone on Thursday. Let’s make this first one count!

First, we can look at the evolution of its price:

The token’s daily returns are quite interesting and show large swings, which can attract LPs to the corresponding Uniswap pool to generate income:

This raises the question of the asset’s volatility. We see that it displays a high level of volatility compared to Bitcoin, for example:

Daily fees are on average around 588 USD, with historical volatility (7-days window) often above 100%. The fees generated by this pool are solid, and we can extract statistics from them:

Which should be put in perspective with the pool’s liquidity:

From this first statistical study, the MORPHO token shows interesting properties that warrant developing predictive models to try to deploy liquidity in a pool or use it as collateral on the following market: https://app.morpho.org/ethereum/market/0x6d95bf5fad1b0427205ee2b595f80b52e22394173de0832efa79fde88abb8525/morpho-usdc and then start managing the risk associated with these operations.

I would be glad to get the MORPHO community feedback on this analysis and to discuss with the community what directions could be improved.

The interesting twist is that property AVMs only update monthly (not real-time like crypto feeds), so the “deviation vs. hardcoded” tradeoff plays out differently. A 30-day staleness window is actually correct for real estate, but you still need a circuit breaker for when the data provider’s confidence drops.

Would love to see the MetaOracle pattern extended to handle slower-moving assets like this.

We’ve got a Chainlink-compatible property oracle live on Base if anyone’s curious: 0x1E999B5Cc9a8453fd071C872A62F9eF5B6e58E3E

One finding worth sharing: fee management functions (setPerformanceFee, setPerformanceFeeRecipient) aren’t exposed through the Supervisor, so they need to be configured before transferring vault ownership. We extended the contract with owner-gated pass-throughs for these. Happy to share the approach or open a PR if there’s interest.

The timelocked owner + independent guardian veto model is exactly the governance layer that novel collateral types need. We’re onboarding an independent guardian next week. Looking forward to seeing more curators adopt this.

On Base: cut all incentives.

On Ethereum:

• USDC: 97,200 MORPHO
• USDT: 76,500 MORPHO
• EURCV: 700 MORPHO
• PYUSD: 52,981.42 MORPHO

For Vault V2 on Ethereum specifically:

• USDC: 10,800 MORPHO
• USDT: 8,500 MORPHO
• PYUSD: 5,886 MORPHO

Supervisor v2 enforces the non-custodial guarantees that institutional DeFi infrastructure requires: explicit delays on material vault changes, independent veto paths, and auditable governance operations.

The goal is is to remove counterparty risk on the curator side and put depositors in control.

Why Supervisor v2

Our operating principle has not changed: depositors should never have to trust a curator’s good intentions when verifiable constraints are available.

Morpho v2 vaults ship with two non-custodial features: timelocks (a delay window before material vault parameter changes take effect) and flash-loan in-kind redemption (which allows depositors to exit a vault by receiving the vault’s underlying assets directly, even if secondary liquidity is thin). Both are meaningful protections, but they assume the depositor is actively monitoring the vault. A user interacting through a non-custodial wallet who checks their position once a month may not catch a pending change before the timelock expires.

Supervisor v2 closes this gap with the guardian role. A guardian is an independent third party authorized to veto any material vault change during the timelock window. If a curator submits a parameter change, such as adding a new collateral market or adjusting an allocation cap, the guardian can block it before it takes effect.

For mainline Steakhouse vaults, each guardian is an Aragon DAO composed of depositor, giving depositors a direct governance path to reject curator decisions they consider misaligned.

It is worth distinguishing the guardian from the sentinel role that already exists in Morpho’s design. A sentinel can also flag or block certain actions, but it can be revoked at will by the vault owner. That revocability makes the sentinel useful for operational monitoring but insufficient as a depositor protection. An owner under pressure (or acting opportunistically) could simply remove the sentinel and proceed. The guardian cannot be removed during an active timelock, making it a harder guarantee.

Steakhouse remains the only large curator where depositors and independent third-party guardians can veto curator actions during the timelock window.

Migration Approach

Mainline Steakhouse v2 vaults will be migrated progressively to the Supervisor v2 model. As with any material change, depositors will be able to veto the migration itself through the existing guardian mechanism during the timelock period.

Partnership vaults may remain under a different governance model depending on the terms of each integration.

No impact on vault operations or depositor positions is expected during the migration.

Deployed Contracts

The Supervisor v2 contract addresses are as follows:

Github Repo

Cantina audit

Looking Forward

Risk cannot be removed, but it can be managed. Supervisor v2 is our current best answer to the question of how a curator earns trust without asking for it: by making its own power legible, constrained, and subject to override.

We will continue to favor verifiable non-custodial guarantees over discretionary authority.

For more detail on Steakhouse vault architecture and risk frameworks, consult the Information Hub.

Allocate up to 55,605.10 MORPHO tokens for rewards on Optimism Mainnet.

Detail

Optimism has awarded a 1.5M OP growth grant to the Morpho DAO. We propose a partial match (40% of total) based on a one week TWAP of MORPHO and OP tokens.

Calculations:

1.5M OP one week TWAP ~= $212,689.50
$212,689.50 x 0.4 ~= $85,075.80
MORPHO one week TWAP ~= $1.53
Matching proposed == $85,075.80 / $1.53 == 55,605.10 MORPHO tokens

These rewards will initially be distributed on either Base or Ethereum, as the MORPHO token is not currently deployed natively on Optimism mainnet. A native deployment may be considered and proposed in a future DAO vote. Distribution will be governed under the optimistic rewards framework, with a high level strategy of growing total USDC deposits and activating relevant new collateral asset markets.

We’re excited to announce the expansion of sky.money’s curator presence on Morpho with two new vaults: the sky.money USDC Risk Capital Vault and the sky.money USDT Risk Capital Vault, each paired with a dedicated stUSDS-collateralized market.

sky.money USDC Risk Capital Vault

This vault accepts USDC deposits and deploys them exclusively into the stUSDS / USDC Morpho market.

Allocations are directed exclusively to a single market, with no fees and no global cap at launch, and are designed to support early-stage growth while preserving conservative risk parameters.

Vault yield is driven by market utilization and borrowing demand, with additional rewards distributed during the initial launch phase via Merkl.

stUSDS / USDC Market

The stUSDS / USDC market allows users to:

• Deposit stUSDS as collateral

• Borrow USDC against it under a conservative initial LLTV of 86%

• Enable looping strategies that increase demand for stUSDS and deepen USDC liquidity

The market uses Morpho’s adaptive interest rate model and is seeded to ensure healthy utilization at launch.

sky.money USDT Risk Capital Vault

This vault accepts USDT deposits and deploys them exclusively into the stUSDS / USDT Morpho market.

Allocations are directed exclusively to a single market, with no fees and no global cap at launch, and are designed to support early-stage growth while preserving conservative risk parameters.

Vault yield is driven by market utilization and borrowing demand, with additional rewards distributed during the initial launch phase via Merkl.

stUSDS / USDT Market

The stUSDS / USDT market allows users to:

• Deposit stUSDS as collateral

• Borrow USDT against it under a conservative initial LLTV of 86%

• Enable looping strategies that increase demand for stUSDS and deepen USDT liquidity

The market uses Morpho’s adaptive interest rate model and is seeded to ensure healthy utilization at launch.

Rewards & Incentives

At launch, Sky is providing USDS incentives via Merkl to bootstrap liquidity and reward early depositors across both vaults. Incentives are continuously distributed, with amounts set on a weekly basis.

Why FLUID

Fluid has quietly become one of DeFi’s most interesting protocols. By unifying lending, borrowing, and DEX trading into a single liquidity layer, it’s built something architecturally different from the usual fork-of-a-fork lending market. The result: $1.8B+ in TVL, billions in monthly DEX volume, and a governance token that underpins an increasingly productive protocol.

Yet until now, FLUID holders had limited options to borrow against their position without selling. That changes today.

For FLUID Holders

You can now use your FLUID tokens as collateral to borrow USDC directly on Ethereum mainnet. No need to sell your position or bridge to other chains. Whether it’s accessing capital for new opportunities or managing short-term liquidity, the FLUID/USDC market is now open.

Expanding Collateral on Morpho

FLUID joins MORPHO, EIGEN, ONDO, SYRUP, BAL, COMP, and other assets supported through Kabu USDC. We do this by leveraging Api3’s OEV infrastructure for precise oracle updates during volatile conditions, combined with Morpho’s partial liquidation design to handle risk more gracefully than traditional all-or-nothing liquidation mechanisms.

https://app.morpho.org/ethereum/market/0xaf53761f4931911877474ab8c7ff856987207ee7ec15e8513ff9cf86939229a0/fluid-usdc

MIP 128 - Lite App Deprecation Part 2
Voted: For, to make sure users on Soneium and Lisk aren’t left stranded when the Morpho Lite app officially shuts down. Since Feather has already successfully completed the engineering work for the other three chains, they are the most reliable and obvious choice to step in here

For SYRUP Holders

You can now use your SYRUP tokens as collateral to borrow USDC directly on Ethereum mainnet.

Whether you’re looking to access capital for new opportunities, manage short-term liquidity needs, or leverage your position, the SYRUP/USDC market provides a new tool for the Maple community.

Expanding Collateral on Morpho

SYRUP joins MORPHO, EIGEN, ONDO, and other assets now supported through Kabu USDC. Our goal is to make all of DeFi available on Morpho by expanding the collateral types supported. We do this by leveraging Api3’s OEV infrastructure for precise oracle updates during volatile conditions, combined with Morpho’s partial liquidation design to handle risk more gracefully than traditional all-or-nothing liquidation mechanisms.

This approach allows us to safely support high-quality assets that typically lack established lending venues.

https://app.morpho.org/ethereum/market/0x38fa7d75c15a0f11cc46e2d1987a05c26a836d0da6b4430657ec5ece38a25a45/syrup-usdc

For ONDO Holders

You can now use your ONDO tokens as collateral to borrow USDC directly on Ethereum mainnet. This unlocks new liquidity options without needing to sell your position or bridge to other chains.

Whether you’re looking to access capital for new opportunities, manage short-term liquidity needs, or leverage your position, the ONDO/USDC market provides a new tool for RWA believers.

Expanding Collateral on Morpho

ONDO joins EIGEN, MORPHO, and other assets now supported through Kabu USDC. Our goal is to make all of DeFi available on Morpho by expanding the collateral types supported. We do this by leveraging Api3’s OEV infrastructure for precise oracle updates during volatile conditions, combined with Morpho’s partial liquidation design to handle risk more gracefully than traditional all-or-nothing liquidation mechanisms.

This approach allows us to safely support high-quality assets that typically lack established lending venues.

https://app.morpho.org/ethereum/market/0x7dea3baf843210ce0a4a9e6374cea47dcd55384fb36d2d701e69b221867b39e5/ondo-usdc

For EIGEN Holders

You can now use your EIGEN tokens as collateral to borrow USDC directly on Ethereum mainnet. This unlocks new liquidity options without needing to sell your position or bridge to other chains.

Whether you’re looking to access capital for new opportunities, manage short-term liquidity needs, or leverage your position, the EIGEN/USDC market provides a new tool for the EigenLayer community.

About Kabu USDC

Kabu USDC aims to make liquidity available on markets that others avoid. We do this by leveraging Api3’s OEV infrastructure for precise oracle updates during volatile conditions, combined with Morpho’s partial liquidation design to handle risk more gracefully than traditional all-or-nothing liquidation mechanisms.

This approach allows us to safely support high-quality assets that typically lack established lending venues.

https://app.morpho.org/ethereum/market/0x6d1dae6238f6f296abb77d9e17a8429132458146bc89d1d2b20516b87a40dee7/eigen-usdc

On Base:

• USDC and WETH: reduce spending to 0 as rates are competitive enough
• EURC: cut by 30% (8,400 MOPHO)

On Ethereum:

• USDC: cut by 10% (216,000 MORPHO)
• WETH: reduce spending to 0
• USDT: keep the same expenditure as last month (85,000 MORPHO)
• EURCV: cut by 80% (1,400 MORPHO)
• PYUSD: distribute 38,136 MORPHO as PYUSD market is growing on Morpho

We also recommend adding 10% incentives for Morpho Vault V2 uniquely for the loan assets where incentives are being distributed.

With the launch of the stUSDS / USDS market and USDS Risk Capital vault on Morpho, Sky.money, the gateway to Sky, one of the largest DeFi projects, and its main product USDS, the largest yield-generating stablecoin, is introducing itself as a curator focused on expanding the utility, demand, and composability of USDS-denominated capital.

Background

Sky is building the next generation of on-chain financial infrastructure around USDS, with a focus on scalable, risk-aware capital deployment.

As part of the sky.money growth initiative, sky.money is launching a series of Morpho vaults and downstream markets designed to support productive use cases for USDS while maintaining disciplined risk controls.

The first deployment includes a USDS curator vault allocating exclusively to a stUSDS / USDS Morpho market, enabling both capital efficiency and native yield for USDS holders.

sky.money Curated Vaults

sky.money USDS Risk Capital Vault
This vault accepts USDS deposits and deploys them exclusively into the stUSDS / USDS Morpho market.

Allocations are curator-managed, with no fees and no global cap at launch, and are designed to support early-stage growth and integration incentives while preserving conservative risk parameters.

Vault yield is driven by market utilization and borrowing demand, with additional rewards distributed during the initial launch phase via Merkl.

stUSDS / USDS Market

The stUSDS / USDS market allows users to:

• Deposit stUSDS as collateral

• Borrow USDS against it under a conservative initial LLTV

• Enable looping strategies that increase demand for stUSDS and deepen USDS liquidity

The market uses Morpho’s adaptive interest rate model and is seeded to ensure healthy utilization at launch.

Rewards & Incentives

At launch, Sky is providing USDS incentives to bootstrap liquidity and reward early participants.

Incentives are distributed weekly, starting as a subsidy and transitioning over time into a sustainable integration-boost program aligned with real usage and capital efficiency.

Earn with Sky

If you are looking to earn yield on USDS or explore capital-efficient strategies using stUSDS, Sky’s curated vaults and markets on Morpho provide a transparent, risk-managed entry point.

For MORPHO Holders

You can now use your MORPHO tokens as collateral to borrow USDC directly on Ethereum mainnet. This unlocks new liquidity options without needing to sell your position or bridge to other chains.

Whether you’re looking to access capital for new opportunities, manage short-term liquidity needs, or leverage your position, the MORPHO/USDC market provides a new tool for the Morpho community.

About Kabu USDC

Kabu USDC aims to make liquidity available on markets that others avoid. We do this by leveraging Api3’s OEV infrastructure for precise oracle updates during volatile conditions, combined with Morpho’s partial liquidation design to handle risk more gracefully than traditional all-or-nothing liquidation mechanisms.

This approach allows us to safely support high-quality assets that typically lack established lending venues.

Get Started

https://app.morpho.org/ethereum/market/0x6d95bf5fad1b0427205ee2b595f80b52e22394173de0832efa79fde88abb8525/morpho-usdc

The Problem

Many assets have real borrowing demand and strong liquidity characteristics, yet few lending platforms support them. Not because demand is missing, but because managing liquidation risk and execution during volatile conditions is complex.

Traditional protocols like AAVE and Compound often avoid these markets entirely due to the technical challenges involved.

The Solution

Kabu USDC addresses this by combining two key technologies:

• Api3’s OEV Infrastructure: Reduces the risk of bad debt significantly by triggering oracle updates exactly when needed, instead of relying on vague update parameters not tied to risk at all. This keeps prices accurate during sharp or fast-moving market events.

• Morpho’s Partial Liquidation Design: Allows downside and execution risk to be handled more gracefully than all-or-nothing liquidation mechanisms used elsewhere.

Together, these technologies enable precise risk management that makes challenging assets safe to support.

Launch Markets

Kabu USDC is launching with two initial markets:

• COMP/USDC: Deep liquidity for COMP holders

• MORPHO/USDC: The first MORPHO lending market on Ethereum mainnet

Expanding the Morpho Ecosystem

Rather than competing with other curators on existing tokens, Kabu USDC expands the set of assets available as collateral on Morpho, unlocking new markets and opportunities.

We’re actively looking to support additional high-quality tokens. If you’re interested in having your token listed on Kabu USDC, feel free to reach out.

Get Started

Since entering the governance space in 2022, 404 Gov has been an active voice and participant in some of the industry’s largest DAOs. What started as a small team of Georgia Tech students focusing on contributing to the Optimism DAO, quickly grew to becoming a trusted delegate in 10 ecosystems.

As the governance team evolved and members ventured into new opportunities, we began to evaluate what was the best path forward for our governance vertical. We determined that our delegated voting power deserves a dedicated steward who can commit the time and focus it requires.

So while 404 Gov is taking a step back from governance, the mission and work will continue with one of our team members, Rika, under her new entity, Axia Network, which has taken over the voting wallets and governance operations. Going forward, Axia Network is responsible for the voting activity of 0xE93D59CC0bcECFD4ac204827eF67c5266079E2b5. Their work and delegation rationale can be found at the following account: Axia Network

Rika has been a core part of our team’s operations for many years now and deeply understands the responsibility involved with being a delegate. We are confident that the delegations will continue to be handled with professionalism under her stewardship. However, those that wish to remove their delegations may do so on Agora.

This transition applies only to governance-related wallets and profiles. Our partnership with Blockchain at Georgia Tech and educational work in Atlanta remains active.

Thank you to those who entrusted us with their voting power for so many years and thank you to the DAOs and contributors we’ve collaborated with in Morpho. It has been a privilege to take part in this ecosystem.

Axia’s values emphasize supporting protocols through sustainable long-term growth, education, and strong oversight, while preserving decentralization by creating and sustaining pathways for community participation and meaningful checks and balances that ensure accountability and transparency across governance stakeholders.

Snapshot Profile: Snapshot | Axia Network

Follow Axia on X: https://x.com/AxiaNetwork0x

Authorize a budget of $35k MORPHO for a grant to support a replacement for the Morpho Lite app for two additional chains.

Detail

The Morpho DAO previously approved a grant to Feather to provide support for three chains affected by the upcoming deprecation of the Morpho Lite app.

The engineering work for this grant has been completed, with launches upcoming in coordination with the relevant chain teams.

There are two other chains that the Morpho Association previously expected a different party to run interfaces for, but which in the end will not currently have coverage following the deprecation of the lite app. These are Soneium and Lisk.

As such, the Association is requesting a budget of $35k MORPHO (based on a one week TWAP immediately prior to the time of disbursement) for a grant to Feather to extend support for these chains as well.

Following this grant, all lite app chains will be supported by high quality third party interfaces, and the deprecation can proceed in late January-mid February range.

Our goal is for all 3 to be live before end of January, but it may get extended into February depending on the respective network’s needs.

It’s great to see Feather stepping in to support these three networks. Would you be able to share any tentative timelines with the community for when support is expected to go live?

My name is Carter W. - I represent the Feather team, a multichain Morpho interface builder. We look forward to expanding the interface support to Celo, Hemi, and Tac while also helping push growth for all of these chains.

Our address tied to this grant is as follows:
0xB4b903C89af8B4A0fC3215033481Dda00f8281f9

More specifically, is a Morpho URD v2 being considered down the line? Incentive campaigns often need to “strike while the iron is hot” to bootstrap liquidity effectively, and reliance on external dependencies can introduce delays when timing matters most.

That said, mid-January seems very reasonable given the holiday period. I’d just want to avoid this becoming a recurring pattern or slipping much further, especially with Markets V2 on the horizon.

Cheers, and happy holidays to the team and community!

MIP 124 - Vault V2 Specific Incentive Campaign
Voted: For, By incentivizing early movers, we prevent liquidity fragmentation and ensure the new vaults are ready to support the upcoming Market V2 launch from day one. It’s a calculated, temporary cost that secures the protocol’s future infrastructure.

MIP 125 - Lite App Deprecation
Voted: For, Handing this off to Feather is the perfect fix; they know the stack and can ensure these markets remain accessible. Locking in two years of guaranteed support for $54k is a steal and saves the core team from constant maintenance distractions. It’s a small price to pay to keep the ecosystem open for everyone.

MIP 126 - List MorphoMarketV1AdapterV2 in Morpho Registry
Voted: For, It gives curators the flexibility to include V1 markets directly without the clunky workaround of nesting them through a V1 Vault first. Crucially, the added ability to force remove a market equips us with better risk management tools if a specific position needs to be cut quickly.

Teams interested in being listed can reach out directly to the Morpho Association through the usual contact channels (https://morpho.org/contact/).

This proposal requests the whitelisting of the Etherealm USDC Vault as a curated vault on the Ethereum mainnet.

Curated by Etherealm Research, this vault employs a proprietary “Morpho Vault Manager” to automate risk constraints and yield optimization. The strategy focuses on a “Barbell Approach”: combining a robust base of transparent, over-collateralized assets with high-conviction “Alpha” allocations (e.g., PT tokens, RWAs), all protected by a real-time automated execution layer.

Curator Overview & Track Record

Etherealm Research is a specialized on-chain asset management team incubated by BitFi Labs. We bridge the gap between complex DeFi yield sources and passive USDC depositors through rigorous code-driven management.

See BitFi USD bfUSD multisig deposits to Etherealm USDC Vault: /debank.com/profile/0x7947931BA0c6531fb1180b5F825e3C9dF538cbb1

Performance (2025 YTD):

• USDC Strategy: +10% Net APY (outperforming standard lending benchmarks).
  Current yields: bfBTC 6.89% APY, bfUSD 6.82%–14.24% APY.

  • bfBTC Dune Dashboard: /dune.com/peratx/bitfi-bfbtc
  • bfUSD Dune Dashboard: /dune.com/peratx/bitfi-bfusd

• Safety Record: 0 Bad Debt, minimal drawdowns with rapid recovery.

• AUM: The team has overseen significant capital across Bitcoin (TVL $400M+) & Stablecoin (TVL $20M+) strategies with zero security incidents.

Strategy: The “Barbell” Approach

Our allocation logic is designed to outperform the “On-chain Fed Rate” (e.g., Sky sUSDS ~4.25%) while maintaining liquidity.

1. Robust Base (Liquidity & Safety):

   1. Allocations to highly liquid, transparent Morpho markets like wstETH/USDC and cbBTC/USDC.

2. Alpha Generation (Yield Enhancement):

   1. Yield-Bearing Collateral: Markets backed by reUSD, mHYPER, and Resolv RLP.

   2. RWA Integration: Exposure to mF-ONE for uncorrelated real-world yields.

   3. Early Liquidity Provision: Participating in early-stage markets to deepen liquidity for Morpho borrowers while capturing attractive yields and incentive premiums for LPs.

Transparency Rule: We strictly refuse opaque “Black Box” assets. If an asset’s underlying collateral cannot be verified on-chain or lacks a reputable third-party audit (e.g., unverified re-hypothecated wrappers), it is blacklisted immediately.

Technical Architecture: Code-Driven Management

Unlike manual curators, Etherealm operates a custom-built Morpho Vault Manager that runs a continuous fetch -> risk -> optimize -> execute loop.

System Components:

• Risk Adapter: A distinct logic layer that enforces strict constraints before any reallocation. It calculates caps based on liquidity depth and utilization.

• Optimizer: Uses discrete dynamic programming (Global/Greedy mode) to find the optimal allocation that maximizes APY within the Risk Adapter’s constraints.

• Automated Runner: Monitors the vault 24/7. If a market violates safety parameters, the system triggers an immediate downgrade or exit without human intervention.

Risk Management & Crisis Response

Our risk framework is defined by specific, hard-coded parameters in our RiskAdapter:

1. Quantitative Constraints

• Utilization Hard Exit: If a market’s utilization reaches critically high levels, the system forces a rigorous exit to prevent liquidity lock-up.

• Target Utilization: We rebalance to maintain utilization within optimal ranges to ensure withdrawability.

• Liquidity Coverage: We require market liquidity to cover at least 80% of our position size; otherwise, the supply cap is automatically tightened.

• Drift Tolerance: Automated checks prevent allocation drift from exceeding safe limits due to interest accrual.

2. Crisis Management Case Studies (Proven Resilience)

Our “Transparency First” and “Rapid Response” philosophy has protected LP capital where others failed:

• The xUSD/deUSD Event: While other curators (e.g., MEV Capital, Relend) suffered significant bad debt due to exposure to opaque assets like xUSD/deUSD, Etherealm blacklisted deUSD early due to lack of transparency.

• mHYPER Incident: During the xUSD contagion, our monitoring systems identified the risk immediately. We executed a “front-run” exit, fully withdrawing capital before the liquidity crunch hit, while others were trapped.

• mMEV Avoidance: We detected a sudden drop in borrowing demand and solvency concerns, triggering an automated exit before the market collapsed.

Vault Specifications

Vault V1 (Current Production):

• Name: Morpho | Etherealm USDC Vault

• Asset: USDC

• Address: 0x7193794ec82f527Efb618Ac50C078D348eCBA4b6

• Morpho App Link: /app.morpho.org/ethereum/vault/0x7193794ec82f527Efb618Ac50C078D348eCBA4b6/etherealm-usdc

• Management Fee: 0% (Current Phase)

• Performance Fee: 15% (On generated yield)

Vault V2 (Enhanced Infrastructure):

• Name: Morpho | Etherealm USDC V2

• Asset: USDC

• Address: 0xB7305D968ECD8a23a13eC01927E3f9588C7653B5

• Morpho App Link: /app.morpho.org/ethereum/vault/0xB7305D968ECD8a23a13eC01927E3f9588C7653B5/etherealm-usdc

• Management Fee: 0% (Current Phase)

• Performance Fee: 0% (On generated yield)

• Key Improvements:

  • Extended market coverage for broader diversification

  • Enhanced rebalancing flexibility for optimal capital allocation

Migration Path:

Currently, capital is primarily allocated to Vault V1. As we continue to refine our infrastructure, we will recommend LPs migrate to the V2 instance to benefit from enhanced market access and improved rebalancing capabilities. Migration guidance and notifications will be provided to depositors as appropriate.

Whitelisting Request

We request the Morpho DAO to whitelist those vault address

• V1 Vault: 0x7193794ec82f527Efb618Ac50C078D348eCBA4b6

• V2 Vault: 0xB7305D968ECD8a23a13eC01927E3f9588C7653B5

Whitelisting this vault brings a sophisticated, technically robust, and risk-proven allocator to the Morpho ecosystem, offering users a safe avenue for diversified real yield.

Resources

• Website: etherealm.one

• Documentation: /etherealm-research.gitbook.io

• X: /x.com/EtherealmOne

• Email: [email protected]

The protocols are not going to be paused entirely to let users still exit the protocol.

Api3 is excited to participate in Morpho as a curator, beginning with vaults focused on providing safe, capital-efficient liquidity to assets that are currently underserved by existing curator strategies.

Api3 enters curation from a structurally different position than most participants. We are an oracle provider by design. For years, our role in DeFi has been to operate and enforce the risk-critical price infrastructure that protocols rely on for pricing, liquidations, and solvency, often under adversarial conditions and during periods of extreme market stress.

In practice, this has meant that Api3 has already been performing many of the core functions of a curator, just without actively managing underlying capital. Morpho curation is therefore a natural extension of our existing responsibilities.

Relevant Experience

Api3 operates price infrastructure that directly determines when positions are liquidated and whether markets remain solvent under stress.

As an oracle provider, we sit on the fault line between market volatility and protocol solvency. Our price feeds directly trigger liquidations and act as the final safeguard against bad debt during stressed market conditions.

In practice, this means that Api3 is routinely responsible for:

• Deciding whether an asset can be supported safely at all

• Determining the level of price precision required for a given market

• Defining update frequency, deviation thresholds, and fallback behavior

• Operating through flash crashes, liquidity gaps, and adversarial trading conditions

Much of this work happens before capital is ever deployed. Protocols often approach us with aggressive or unconventional designs such as illiquid collateral, experimental assets, or narrow liquidation margins. Our role is to either make those designs robust or explicitly refuse support when risk cannot be contained.

This continuous process of evaluating assets, stress-testing assumptions, and translating market reality into enforceable parameters is directly analogous to the core responsibility of a curator. The difference is that, until now, Api3’s scope has stopped at oracle configuration rather than extending into capital allocation.

Morpho curation allows us to apply the same risk discipline end-to-end, from price formation, to liquidation behavior, to market construction itself.

Competitive Advantages as a Curator

Asset Support Without Oracle Availability Constraints

Api3 is not limited to the set of assets that a single oracle provider chooses to make available.

Through our first-party oracle model, we operate price feeds together with known data providers such as CoinGecko, NCFX, and others. This allows us to design and maintain feeds for assets that would otherwise be unsupported, subject to strict liquidity, market structure, and operational risk requirements.

As a result, we can curate markets for assets that are underserved by existing curators.

OEV-Driven Yield Generation

Api3’s ability to internalize OEV allows liquidation-related value that is traditionally lost to searchers to be recaptured and redirected.

Api3 has already operated searcher infrastructure for its markets for an extended period, including through recent market stress events. This provides us with practical experience in auction execution, liquidation dynamics, and adversarial conditions that directly apply to Morpho markets.

For Morpho, this internalized value can generate additional yield that other curators cannot access and can be used to boost markets or improve depositor outcomes without relying on subsidies or external incentives.

Precision Pricing and Partial Liquidations

Api3’s OEV-enabled update flow allows price feeds to update as granularly as needed, without being bound to fixed intervals or coarse heartbeat assumptions.

When combined with Morpho’s support for partial liquidations, this enables more precise liquidation thresholds, reduced over-liquidation risk, and improved safety margins for volatile assets. Together, these properties make it possible to support markets that would otherwise be uncuratable under traditional oracle and liquidation models.

Alignment and Capital Commitment

Api3 intends to deploy its own treasury capital into the vaults it curates.

This ensures direct economic alignment with depositors and the Morpho ecosystem. Risk decisions, parameter choices, and operational tradeoffs will be made with Api3’s own capital exposed alongside users, rather than purely in an advisory or third-party capacity.

Initial Specialization

Api3’s initial focus as a curator will be vaults that provide liquidity to assets that are currently underserved.

These are markets where risk is manageable but requires precision, where capital efficiency depends on oracle quality, and where traditional curator models struggle to operate safely. By combining oracle-native risk management, OEV-driven yield, and Morpho’s flexible liquidation mechanics, Api3 aims to expand the set of assets that can be supported responsibly on Morpho.

We look forward to engaging with the Morpho community on asset selection, market design, oracle configuration transparency, risk parameterization, and long-tail market support. We welcome feedback and discussion as we begin this next phase.

Use the following paragraphs for a longer description, or to establish category guidelines or rules:

• Why should people use this category? What is it for?

• How exactly is this different than the other categories we already have?

• What should topics in this category generally contain?

• Do we need this category? Can we merge with another category, or subcategory?

Amend the optimistic rewards framework to account for external tokens grants.

Background

The goal of this proposal is to ensure that the Morpho Association is well positioned to apply for and coordinate the distribution of external grants which are allocated by external parties to the Morpho DAO’s rewards multisig, which may have distribution requirements imposed such as blacklisting specific addresses, targeting distribution to certain assets, or a specific time period for disbursal.

As it stands, the optimistic rewards framework does not provide a clear mandate for the handling of such external grants.

Detail

The Morpho Association proposes that the DAO authorize the Morpho Association to manage the distribution of non-MORPHO incentives grants received by the DAO from third parties, as well as to apply for such grants on behalf of the DAO. If approved, allocations of non-MORPHO third party incentive grants may be carried out at the discretion of the Morpho Association, allowing us to conform to partner requirements as well as taking an agile approach to incentives distribution of external token grants in new chain ecosystems.

This does not in any way authorize the Morpho Association to take possession of granted tokens or to use them for other expenditures.

Authorize a budget of $54k MORPHO for a grant to support a replacement for the Morpho Lite app.

Detail

The Morpho Association has recently made the decision to sunset the Morpho Lite app. While this interface was successful in its goal of allowing support to be extended to new chains with a smaller engineering effort, it has become clear that the limited functionality presents insufficient data to users.

The majority of lite app chains already have high quality external UIs and will not be significantly affected by this change. Three do not : Celo, Hemi, and TAC.

As such, the Association is requesting a budget of $54k MORPHO (based on a one week TWAP immediately prior to the time of disbursement) for a grant to Feather, a Morpho stack builder, to provide frontend support to the three chains that lack high quality third party interfaces. Feather will commit to providing support for these chains for a two year duration.

Sentora builds repeatable, conservative programs for long-term allocators. Integrations are non custodial by default and fit into existing custody rails and wallet infrastructure. Because our clients operate in regulated environments, compliance and monitoring are first order concerns.

How We Work

Every engagement follows an auditable procces that is designed to be predictable and reversible.

1. Proposal and scope with clear constraints and success criteria

2. Independent risk review covering liquidity depth, oracle coverage, LLTVs and caps, and liquidation paths

3. Execution with segregated keys and policy controls, followed by automated state verification

4. Continuous risk monitoring and alerts

Parameter changes are introduced in small steps with timelines for review. If a risk materializes, we publish clear incident notes and post mortems.

Track Record and Research

The team has managed over $3 billion in institutional deployments across leading protocols and blue-chip crypto assets, with durable TVL from institutional allocators. We publish research on market structure, stablecoin dynamics, and risk in lending, and we use these findings to inform parameter choices and community discussions. At the moment, our track record in curation is the next one:

• Sentora RLUSD on Euler: ~$370M

• Sentora PYUSD on Euler: ~$270M

• Sentora PYUSD Earn on Kamino: ~$150M

Research and Risk Infrastructure

We publish regular research on market structure, stablecoin dynamics, protocol risks, and lending market health through our Sentora Research platform. These findings inform parameter choices and governance discussions.

Our Risk Radar platform delivers real-time economic risk monitoring across 40+ DeFi protocols, including Morpho. Risk signals are computed on a block-by-block basis and currently protect billions of dollars in institutional capital. We recently launched Risk Pulse, a real-time anomaly detection system tracking liquidations, whale movements, high-risk loans, volume spikes, depegs, and other critical indicators.

In collaboration with CoinDesk Indices, we developed the CoinDesk Overnight Rates (CDOR): the first benchmark interest rates drawing on Aave’s lending pools, establishing institutional-grade reference rates for stablecoin markets.

How We Engage with Governance

We contribute data-driven proposals backed by analysis that can be verified without specialized access:

• Pre-listing diligence: Liquidity analysis, oracle reviews, and stress scenarios before listings or parameter changes

• Transparent reporting: Public dashboards, alerts, and concise summaries of what changed and why

• Education: Ongoing content that explains risk drivers and market health to improve debate quality

Our governance philosophy aligns with Morpho’s permissionless vault model. As we’ve written in our research on risk ownership: while protocols like Morpho provide powerful infrastructure, responsibility for asset selection and risk parameters rests with curators and ultimately LPs. We take that responsibility seriously.

We are a team of more than 50 operating internationally with experience across Crypto, DeFi, and TradFi. Functions include research, risk, engineering, operations, security and compliance, and partnerships. Duties are segregated so operators who execute cannot unilaterally change policy, and a separate security authority can revoke permissions.

Our Vision for Morpho

We believe Morpho represents one of the most sophisticated vault frameworks in DeFi, with the flexibility and risk-isolation properties that institutional allocators require. As active curators on Euler and Kamino, we understand the balance between yield optimization and capital preservation.

We look forward to contributing to the Morpho ecosystem with the same rigor that has defined our work across the DeFi landscape: conservative design, transparent operations, and a relentless focus on protecting depositor capital.

UPDATE: 11/12/25
This call has been cancelled and discussions would happen async. A detailed written update about ongoing matters at Morpho would be posted soon.

Hey gm community!

We are inviting delegates and community members to our final governance call for 2025.

The call is happening on Thursday, December 11. Please mark your calendar. You can also subscribe to the public Morpho DAO Governance Calendar and always be up to date with our calls.

Logistics

Date: Thursday, December 11, 2025.

Time: 17:00 - 18:00 UTC.

Link to join: https://meet.google.com/jwy-uuca-jjb

The link to join Thursday’s governance call is also in the governance calendar.

Agenda

• Grants Update 1

• Association Updates

• Open Discussion

  • 2026 governance plans

More Information

• Please post in this thread if you have a topic you would love to discuss so we can plan accordingly and update the agenda.

• We will record the call and publish it afterward for public review, so please keep that in mind.

Hope to see you all on Thursday.

As the total grant amount reached 10M Morpho, it is the last period of the Morpho Olympics program and the final payments will be adjusted proportionally.

The minimum threshold this time is of 38M.

Introduce a dedicated incentive campaign to accelerate migration from Vault V1 to Vault V2.

Proposal

Vault V2 was released a few weeks ago. To facilitate a smooth transition and ensure that Market V2 can bootstrap liquidity efficiently once it launches, we propose creating a targeted rewards campaign focused on growing deposits in Vault V2.

This campaign is designed to incentivize users to move from Vault V1 to Vault V2. The migration is strategically important because Vault V2 will be able to place offers on Market V2 while continuing to allocate deposits to Market V1 during the transition period.

The proposed campaign would add, on top of the existing Vault V2 yield, an additional reward rate that would start very high when Vault V2 supply is small and would progressively converge toward the Vault V1 reward rate as total Vault V2 deposits approach $400 million.

To achieve that, we computed that it would increase the current rewards budget by approximately 14% which seems a reasonable number.

We believe this targeted incentive program will accelerate adoption of Vault V2, strengthen liquidity ahead of the Market V2 launch, and improve the overall migration experience for users.

This campaign would follow the Optimistic Rewards Framework as defined in MIP-109.

If approved, the initial campaign would run from mid-December through the end of December, with subsequent campaigns aligned monthly with the standard Morpho rewards cycles.