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Rewards on Morpho

What are Rewards?

Rewards are incentives distributed to users of the Morpho protocol that encourage specific behaviors like supplying assets, borrowing, or providing collateral. These rewards typically come in the form of tokens (like MORPHO or other assets) and are provided by various entities including:

  • The Morpho DAO
  • Market creators looking to bootstrap liquidity
  • Vault curators seeking to attract depositors
  • Token issuers wanting to promote usage of their assets

Types of Reward Programs

Market Programs

Market programs incentivize specific activities within individual Morpho Markets:

  • Supply Rewards: Earned by users who supply assets to a market
  • Borrow Rewards: Earned by users who borrow from a market
  • Collateral Rewards: Earned by users who provide collateral in a market

Each market program distributes rewards linearly over a defined period, with specific amount distributed linearly over the period for each activity type.

Vault Programs

Vault programs focus specifically on incentivizing deposits into Morpho Vaults:

  • Rewards are distributed based on your share of the total vault deposits
  • The rate is expressed as an annualized percentage

Uniform Rate Programs

These programs currently used by the Morpho DAO for MORPHO token distribution apply a consistent reward rate for each dollar supplied across eligible markets:

  • All users receive the same base rate up to a predetermined supply limit
  • If the total supply exceeds this limit, the rate adjusts to maintain a fixed daily distribution amount
  • This approach ensures fair reward distribution as the protocol scales
  • Some multiplier and divisors for specific tokens might apply. Refer to the forum for such granularity details.

How Rewards Work

  1. Earning Rewards: Users automatically earn rewards while participating in incentivized markets or vaults
  2. Computation: Rewards are calculated off-chain based on on-chain activity data
  3. Distribution: Rewards are made claimable approximately weekly through the Universal Rewards Distributor (URD)
  4. Claiming: Users can claim their earned rewards through the Morpho interface with no deadline, or via some other methods as onchain transactions on the urd direclty (see claiming methods here).

What Users Need to Know

  • There's nothing special users need to do to earn rewards besides participating in the protocol
  • Rewards accumulate over time and remain claimable indefinitely

→ Tutorial to claim rewards on the Morpho interface → Tutorial to claim rewards manually → Tutorial to integrate rewards

By providing these incentives, Morpho creates a win-win situation where users earn additional yield while the protocol and its markets gain liquidity and activity, creating a sustainable ecosystem that benefits all participants.