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How can distributors generate revenue on Morpho?

There are different ways to generate revenue on Morpho.

Curators are generating revenue by retaining a portion of the performance of their vaults, while distributor channels have different ways to charge fees as well.

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.

Fees

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

FeesVault V2Vault V1
Performance fee (taken on the native yield)✅  0% → 50%✅  0% → 50%
Management fee (taken on the Assets Under Management)✅  0% → 5%❌

Architecture

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

Earn Architecture

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

Vaults Allocation

Examples of possible configurations

Selection Guide

ModelControlTrust RequiredComplexityBest For
V2 WrapperHighNoneLowIndependent distributors
OffChain AgreementSharedHighMediumStrategic partnerships
OnChain SplitterSharedNoneHighFormal trustless partnerships

1. Vault V2 Wrapper Model

Wrapper Model

Setup: Distributor owns and operates a Vault V2 that allocates entirely into an existing Vault V1.

Fee Structure:
  • Vault V1 (curator-managed): Charges performance fee (0-50%)
  • Vault V2 (distributor-owned): Adds management fee (0-5%) on top
Advantages:
  • Clear onchain fee separation
  • Distributor controls vault settings and branding
  • No coordination required with V1 curator

Use Case: Best for distributors wanting full control over their product while leveraging established V1 vaults.

2. Offchain Agreement Model

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

Two Options: Option A - New Dedicated Vault:
Offchain New
  • 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:
Offchain Existing
  • 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

Splitter Contract

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:
  1. Vault accrues performance/management fees
  2. Fees sent to splitter contract
  3. 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.