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Rewards for Borrowers

Borrowers on Morpho Markets can earn rewards that offset borrowing costs or even generate net positive yields. These incentives are designed to bootstrap markets, attract liquidity, and encourage specific borrowing behaviors.

Overview

As a borrower on Morpho, you can earn rewards for borrowing an asset from a market.

Net Cost Calculation: 
Net Borrow APY = Borrow APY - Borrow Rewards APR

It is also possible to incentivize a simple collateral deposit (without the borrow action required).

In favorable conditions, rewards can exceed borrow costs, resulting in negative net APY (borrowers earn while borrowing).

Borrow Rewards:
  • Incentives for borrowing an asset
  • Accrue based on outstanding borrow balance
  • Offset borrowing costs directly

Net Cost Display Priority

For borrow products, users care most about net cost after all rewards:

  • Display net APY prominently
  • Highlight when borrowing becomes profitable (negative net APY)
  • Show breakdown: borrow cost - borrow rewards

Distribution System

Rewards distribution has migrated from the Morpho URD system to Merkl. New campaigns use Merkl, while historical rewards may still be claimable via the legacy URD system.

The claiming process is identical for all Morpho users, regardless of whether they're depositors, borrowers, or collateral suppliers.

For complete details on distribution systems, see:

Learn More

For comprehensive information about integrating rewards:

Implementation

For practical implementation guidance specific to borrow products, see: