How can distributors generate revenue on Morpho?

There are different ways to generate revenue on Morpho.

Curators and distributor channels have different ways to charge fees.

A distributor channel is any platform, application, or service that integrates Morpho's functionality to offer it to their own users. This includes wallets, DeFi aggregators, portfolio management apps, or custom interfaces that embed Morpho vaults. These distributors make Morpho accessible to users who might not otherwise directly interact with the Morpho protocol, and they can earn fees by facilitating these interactions.

To generate revenue, a distributor has several possibilities developed below:

Own its own revenue layer (a Fee Wrapper or a Vault V2 Wrapper)
Have an agreement with a curator (onchain or offchain)

Fees

Morpho Vault V2 can charge 2 types of fees, while Morpho Vault V1 has only one:

Fees	Vault V2	Vault V1
Performance fee (taken on the native yield)	✅ 0% → 50%	✅ 0% → 50%
Management fee (taken on the Assets Under Curation)	✅ 0% → 5%	❌

Architecture

Here is the setup of the current Earn architecture with USDC as an example

Here is the vault model illustrating asset flow in terms of allocation

Examples of possible configurations

Model	Control	Trust Required	Complexity	Best For
Fee Wrapper	High	None	Low	B2B distribution, per-customer vaults
V2 Wrapper	High	None	Low	Independent distributors
Offchain Agreement	Shared	High	Medium	Strategic partnerships
Onchain Splitter	Shared	None	High	Formal trustless partnerships

1. Fee Wrapper

A Fee Wrapper is a Vault V2 configured in a specific, constrained mode that enables distribution channels to add a fee layer on top of an existing Morpho Vault V2.

Main Morpho Vault V2: Handles actual capital allocation to Morpho Markets (V1, V2, future versions). This is where yield is generated.
Fee Wrapper: A lightweight Vault V2 that deposits into the main Morpho Vault V2, with the sole purpose of adding a fee layer per customer/distributor.

Key Properties

Property	Description
ERC-4626 Compliant	All standard vault functions work as expected
Immutably Bound	Bound to a single Morpho Vault V2 at deployment. Can not be changed
Fee Flexibility	Owner can configure performance fees (up to 50%) and management fees (up to 5%)
Simplified Configuration	Risk management functions are abdicated, making operation simpler
Shared Liquidity	Users share the liquidity of the underlying Morpho Vault V2

Use Cases

B2B Distribution: Distributors can deploy one Fee Wrapper per customer, each with custom fee configurations
Revenue Sharing: Split native yield between the distribution channel and end users (e.g., 50/50 split via fee configuration)
White-Label Products: Distributor can offer Morpho yield under their own brand with their own fee structure

Fee Wrapper details

Yield and Rewards

Native Yield (Inside ERC-4626 Flow)

Native yield comes from interest paid by borrowers on underlying Morpho Markets. It accrues automatically to shares over time, requiring no separate claim, shares simply appreciate in value. Users withdraw the same token they deposited (e.g., USDC) plus accrued interest. Performance and management fees are applied to this yield.

External Rewards (Outside ERC-4626 Flow)

External rewards (e.g., MORPHO tokens) come from incentives provided by Morpho governance, market creators, or token issuers, and are distributed via Merkl (updated every 8 hours). These rewards require a separate claim action through Merkl and are automatically forwarded to end depositors by default. It is possible to implement custom distribution, for this specific reward routing (e.g., distributor claims rewards instead of users), coordinate with the Merkl team for address remapping configuration.

Integration Guide

Exact calls and formulas so partners can integrate the same post-fee APY logic directly.

1) Onchain reads

feeWrapper.adapters(0)        → adapter address
adapter.morphoVaultV1()       → underlying Morpho vault address (Vault V2)
feeWrapper.performanceFee()   → wrapper perf fee (WAD)
feeWrapper.managementFee()    → wrapper mgmt fee per second (WAD)

The on-chain managementFee() returns a per-second rate. Multiply by 365 × 24 × 3600 to get the annual rate. The API managementFee field is already annualized.

2) Morpho API call

Endpoint: POST https://api.morpho.org/graphql

Supported chain IDs on the Morpho API are available here.

query FeeWrapperAPY($underlyingVault: String!, $chainId: Int!) {
  underlying: vaultV2ByAddress(address: $underlyingVault, chainId: $chainId) {
    avgApy
    performanceFee
    managementFee
    rewards {
      asset { address, symbol }
      supplyApr
    }
  }
}

with variables:

{
  "underlyingVault": "underlyingVault_address",
  "chainId": 1
}

Field	Description
`avgApy`	Realized average APY from share price, before the vault's own fees, excluding rewards. We use `avgApy` instead of `avgNetApy` because `avgNetApy` is already net of the underlying vault's fees and includes rewards, which makes the two-layer fee math confusing
`performanceFee`	Fraction (e.g., 0.10 for 10%)
`managementFee`	Annual fraction (e.g., 0.02 for 2%)
`rewards[].supplyApr`	Individual external reward APRs

3) APY computation

adapterYield            = avgApy × (1 − underlyingPerfFee) − underlyingMgmtFee
wrapperPerfFeeDeduction = max(adapterYield, 0) × wrapperPerfFee
nativeYield             = adapterYield − wrapperPerfFeeDeduction − wrapperMgmtFee
rewardsApr              = sum(rewards[].supplyApr)
netApy                  = nativeYield + rewardsApr   // when rewards pass through to depositors

If rewards are redirected via Merkl address remapping, omit rewardsApr from the final sum (end users do not receive them).

Deployment

The simplest deployment method uses the FeeWrapperDeployer periphery contract:

FeeWrapperDeployer source code
Fee Wrapper Demo App - Educational tool to help with deployment

Find the factory addresses in addresses section.

Security Considerations

What the Owner CAN Do:

Change performance fees (up to 50%, timelocked)
Change management fees (up to 5%, timelocked)
Change fee recipients (timelocked)
Add/remove allocators (timelocked)

What the Owner CANNOT Do:

Change the underlying vault (abdicated)
Add new adapters (abdicated)
Remove the existing adapter (abdicated)
Access user funds directly
Prevent users from exiting (via forceDeallocate)

2. Offchain Agreement Model

Setup: Distributor and curator establish a legal revenue-sharing agreement for liquidity provided.

Two Options: Option A - New Dedicated Vault:

Curator launches new vault (V1 or V2) exclusively for distributor's users
Fee split negotiated up-front (e.g., 50/50 on performance fees)
Clean attribution of liquidity and fees

Option B - Existing Vault:

Distributor directs users to existing vault
Revenue share calculated based on tracked liquidity contribution
Requires tracking mechanism (transaction mapping, user addresses, time-weighted deposits)

Considerations:

Legal contract enforces agreement
Option B requires reliable attribution system
Settlement handled offchain (periodic payouts)

Use Case: Best for strategic partnerships where trust exists or when onchain complexity isn't warranted.

3. Onchain Splitter Contract Model

Setup: Smart contract automatically splits fees between curator and distributor based on pre-defined terms.

Requirements:

Dedicated new vault (V1 or V2) for the partnership
Splitter contract receives fee recipient role
Automated distribution of fees to both parties

Fee Flow:

Vault accrues performance/management fees
Fees sent to splitter contract
Contract automatically distributes per agreement (e.g., 60% curator / 40% distributor, or 50/50)

Advantages:

Trustless execution
Transparent onchain tracking
No manual settlement required

Trade-offs:

Requires dedicated vault (curator unlikely to share existing vault)
Additional smart contract complexity
Gas costs for splitting operations

Use Case: Best for formal partnerships requiring trustless, transparent revenue sharing with onchain guarantees.