My name is Liam, and I am sharing application details for the Morpho protocol as a part of the Unichain growth CFM 1. Please find the Morpho Association’s responses below.
Past Performance
What is the project’s average TVL over the last 30 days on other networks? Please list by network.
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Ethereum Mainnet: $4.94B 3-month average
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Base: $1.2B 3-month average
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Unichain: $128m total deposits (live for one month)
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Polygon POS: $178m total deposits (live for three months)
TVL here is defined as deposits, or the aggregate value of supplied liquidity and collateral for onchain loans.
Please describe how you have historically increased TVL on new networks.
The Morpho protocol has historically experienced growth on new networks because of three core growth levers:
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The Morpho protocol as a coordination layer for borrowers and lenders: The Morpho protocol is actively used by curators and large DeFi borrowers and lenders to coordinate onchain loans. The Morpho Association endeavors to expand the network effects between Morpho protocol curators, DeFi asset issuers, prime integrators, and users to expand the usage of the Morpho protocol, as per Morpho DAO approval.
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Prime integrations: The Morpho protocol is purely lending infrastructure. In alignment with the Morpho DAO’s goals, the Morpho Association promotes adoption of the Morpho protocol’s infrastructure through ecosystem partnerships and integration support. Each new chain that the Morpho protocol deploys on is anchored by at least one prime opportunity that drives its expansion. On Base, this prime opportunity was Bitcoin-backed loans with Coinbase; on Polygon POS, this opportunity was a leveraged looping strategy for Apollo’s tokenized fund, ACRED.
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Expanding Network Effects of the Protocol: With DAO approval, the Morpho association expands the network effects of the Morpho protocol by aligning the interests of curators, DeFi protocols, and users. Additionally, curators in the Morpho protocol nurture strong relationships with the largest DeFi protocols and their users to actively grow deposits into their vaults as well as the utilization of market liquidity. An example of this coordinated growth is Gauntlet and K3’s onboarding of bespoke EtherFi incentives to their respective vaults to attract ETH liquidity on Unichain, which is then made available to EtherFi LPs. Coordinated growth such as this example ensures that liquidity is efficiently utilized when it migrates to new ecosystems.
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Incentivizing the most in-demand markets: Subject to DAO oversight, the Morpho Association supports community-led incentive allocations to the highest-demand markets on the Morpho protocol. By focusing incentive spending on the protocol’s core lending markets, the Morpho Association ensures efficient and data-driven expenditure of dedicated incentive spending.
Receiving Funds
If your project receives the $100,000 grant funding, what do you estimate the project’s 30-day trailing average TVL will be on Unichain August 10th 2025?
$185m 30-day trailing average TVL
What Utilization ratio do you expect the protocol to produce from July 11th to August 10th? Where Utilization Ratio = Total Assets Borrowed divided by Total Assets Supplied during the 30 day evaluation period.
90%
Please detail how your team would use the funds to achieve this goal. Provide as much detail as necessary.
Answering this question requires evaluating the Morpho protocol’s past growth on L2s and using this strategy and the data collected to advise its growth on Unichain.
Past growth: With DAO approval, the active coordination between the Morpho Association and users of the Morpho protocol (curators, DeFi protocols, asset issuers, and prime integrations) has been the most impactful driver of protocol growth. The Morpho Association has successfully applied this approach across Base and Polygon POS in addition to Ethereum mainnet, consistently achieving strong TVL growth, external protocol alignment, and data to back it up.
In addition, the Morpho protocol has very strong historical performance with past grant allocations. For example, in the most recent grant from the Optimism grants council, the Morpho protocol drove $44 in deposits per OP in attributable net TVL inflows, nearly 2x the next closest protocol in TVL inflows over the course of the campaign. Data on the most recent OP grant campaign can be found in the following link: https://gov.optimism.io/t/s7-grants-council-impact-analysis/10055
Morpho is now the largest lending protocol across all L2s. In the one month that the Morpho protocol has been live on Unichain, it has already experienced growth to $128m TVL, and with continued efforts from curators, integrators, and the Morpho Association, the Morpho protocol on Unichain is expected to sustain a similar growth velocity.
Use of funds for the CFM campaign: Per Morpho DAO approval, the Morpho Association will assist in administering incentives in alignment with both Unichain and the protocol’s growth strategies to drive growth in high-impact markets and support strategic partnerships on Unichain. Details of the Morpho DAO’s incentive distribution strategy can be found in MIP 103 and MIP 97. Links to both are below:
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MIP 103 - Incentives Distribution on Unichain: https://forum.morpho.org/t/mip-103-incentives-distribution-on-unichain/1789
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MIP 97 - Optimistic Rewards Framework: https://vote.morpho.org/#/proposal/0x35bab79a83edee0ae92318c703934fdff610c41197d0370a2bc9b2bf3853a6c9
Granular distribution focus with the CFM Grant:
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Target Market Incentives: A portion of the grant will be used to incentivize growth toward the Morpho protocol’s largest lending markets, with rewards distributed proportionally based on market share and the strategic importance of the underlying assets. This effort will align closely with Unichain’s broader growth initiatives, which are to bolster the LRT<>LST<>ETH looping trade and become a core venue for blue-chip stablecoins. Today, the Morpho Association has been granted approval to administer a $500K rewards package to the Morpho protocol on Unichain, with 60% focused on ETH supply, 30% on stablecoin supply, and 10% on borrower incentives. Details of this program can be found in MIP 103 linked above.
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Prime Partnership Support: per DAO approval, a portion of CFM funds will support the onboarding of prime integrations, coordinated by the Morpho Association in alignment with the goals of the Morpho DAO. Tailored incentives are often key to securing these deals, and the Morpho Association will reserve funds to ensure these growth opportunities are effectively funded. Integration grants and milestone-based bonuses are a useful mechanism to incentivize sticky liquidity from real-world integrations. If no prime integrations come onto Unichain during the scope of this CFM campaign, Morpho will distribute these allocated incentives back to the target markets listed above.
Counterfactual - Not Receiving Funds
If this project does not receive the $100,000 grant funding, what do you estimate the project’s 30-day trailing average TVL will be on Unichain on August 10th 2025?
$150m 30-day trailing average TVL
The Morpho Association remains committed to being a core growth partner for Unichain’s ecosystem. Demand for lending on Unichain goes well beyond this grant’s funding and will persist as long as onchain liquidity exists. As long as Unichain operates, the Morpho protocol will be its premier lending infrastructure.
Please expand on what this project team would do to increase TVL on Unichain if you do not receive the grant funding. Provide as much detail as necessary to justify your estimates.
As per the Morpho DAO’s approval, the Morpho Association will continue to serve the growth of the Morpho protocol on Unichain. Growth will continue in several ways:
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Coordination between Morpho protocol curators, DeFi asset issuers, and prime integrations.
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Pushing adoption of the Morpho protocol infrastructure with Earn and Borrow products. Products like Kiln’s Earn middleware (https://docs.kiln.fi/v1/kiln-products/defi/morpho-via-kiln-defi) offer turnkey solutions for using the Morpho protocol infrastructure, allowing teams to focus on their core business while meeting user demand for yield with no additional overhead. The use case for this infrastructure has been demonstrated through integrations with Safe, TrustWallet, Ledger, Lemon, and Coinbase, and the Morpho Association aims to extend its adoption to protocols on Unichain.
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Continued focus of existing rewards grants on the most in-demand markets as per DAO approval.
While active growth efforts would continue in the same core ways, this grant is expected to accelerate liquidity aggregation into the most scalable, efficient, and battle-tested lending protocol on Unichain.
Disclaimer: References to the Morpho protocol describe the decentralized, immutable, and permissionless smart contract system. The Morpho Association is an independent non-profit entity that supports the protocol’s ecosystem growth. The Morpho Association does not provide financial services, hold user funds, or control user activity or protocol operations. Protocol outcomes are subject to market conditions, user behavior, and third-party integrations outside the control of the Morpho Association. All integrations and incentive programs are subject to community governance and may evolve over time.