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Rewards for Lenders

Vault depositors on Morpho can earn additional rewards beyond base lending yield through incentive campaigns. These rewards significantly enhance total returns and are a key feature of competitive earn products.

Overview

When you deposit into a Morpho Vault, you can earn rewards from two distinct sources:

  1. Direct Vault Campaigns: Rewards distributed directly to vault depositors
  2. Forwarded Market Campaigns: Rewards earned from underlying markets where the vault allocates liquidity

The total yield a depositor earns combines the native lending APY with reward APR from both sources:

Net APY = Native Vault APY + Vault Campaign APR + Forwarded Market Campaign APR

What Makes Vault Rewards Unique

Reward Forwarding

This is the key differentiator for vault depositors. When a vault allocates liquidity to underlying Morpho Markets that have active supply campaigns, those market-level rewards are automatically forwarded to vault depositors.

How it works:
  1. A Morpho Market has an active supply campaign
  2. Your vault allocates liquidity to that market as a supplier
  3. The vault contract earns those market rewards
  4. Rewards are automatically reallocated to individual vault depositors
  5. You claim these forwarded rewards directly
Why this matters:
  • You benefit from ALL active campaigns across the markets your vault uses
  • Vault curators optimize allocations, and you receive rewards automatically
  • More capital-efficient than directly supplying to individual markets

Complete APY Components

The net APY shown to users combines multiple components:

Net APY = Native APY + Underlying Token Yield + Rewards APR - Performance Fee

Where:

  • Native APY: Native vault yield before fees and rewards
  • Underlying Token Yield: Yield from the asset itself (for yield-bearing tokens)
  • Rewards APR: Vault rewards + weighted market rewards
  • Performance Fee: Applied only to base APY

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 earn products, see: