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Incentives

Context​

Unlike traditional lending pools, Morpho Blue allows projects to take a more targeted approach to incentivizing specific use cases. On Morpho Blue, they can incentivize a specific pair of assets with a strong use case that will help drive further adoption of their token. As a result, many projects will want to distribute incentives on Morpho Blue.

In line with the guidelines presented in this forum post, a standardized and clear method for distributing incentives is essential. The Universal Rewards Distributor (URD) is a central component of this incentive distribution mechanism.

Universal Rewards Distributor (URD)​

Overview​

The Universal Rewards Distributor (URD) is a bespoke smart contract tailored for the distribution of incentives, usable on Morpho Blue markets. Its primary function is to manage the distribution of incentives, focusing on specific asset pairs to stimulate token adoption and market activity.

Purpose of URD​

The URD is engineered to bring uniformity and efficiency to the incentive distribution process. It caters to both external project rewards and MORPHO tokens, addressing the common challenges and complexities associated with rewards distribution in DeFi.

How URD Functions​

Offchain Computation: The process starts with an offchain script that computes a Merkle tree, which outlines the rewards each user is entitled to.

Smart Contract Utilization​

Initially under the governance of the Morpho DAO, this contract allows the Morpho Operator to periodically update the Merkle root, ensuring the rewards distribution remains accurate and up-to-date.

Claiming Rewards:​

Upon each update of the Merkle root within the contract (after the end of an epoch), users can claim their designated rewards.

Additional Features and Considerations:​

For a comprehensive insight into the URD's technical makeup, including aspects like owner and updater management, updater specifications, Merkle tree intricacies, and the specificities of the claim process, please refer to the Technical Reference section.
It's crucial to acknowledge and understand the inherent limitations of the URD, such as the absence of a queue mechanism for the pending root. Appropriate strategies and planning are necessary to navigate these limitations and ensure smooth and efficient operations.

For additional details and guidance on how to integrate with the URD, please consult the official URD documentation.

Rewards Emission Data Provider​

The rewards emission data provider allows the setup and adjustment of reward emissions rates with precision, catering to the nuanced needs of different market conditions and strategic goals. This is the contract one has to look after to get the rates of incentives emitted on targetted Morpho Blue markets.

Jump on the rewards computation section for further details.