Provide MORPHO/superOETHb liquidity on Aerodrome

Summary

Swap 25% of the protocol’s accumulated MORPHO for WETH. Use the WETH to mint Super OETH and pair it with MORPHO in a new Aerodrome pool.

Background

Since late 2022, several Origin products have been earning MORPHO rewards by lending stablecoins and WETH to the original Morpho Optimizers and, more recently, Morpho Vaults. These MORPHO tokens have never been transferable and thus could not be harvested for yield. As a result, the Origin DAO has been accumulating a substantial amount of MORPHO tokens. This could prove to be a strategic holding for the DAO to help ensure meaningful integrations with one of the industry’s top money market protocols and maximize long-term value for OGN holders.

According to a recent announcement from Morpho Labs, transferability is expected to be enabled on Thursday, 21 November 2024. This presents an opportunity for the Origin DAO to utilize a substantial amount of incoming capital that was previously inaccessible. Recent estimates indicate that Origin’s products have earned over 2% of the reward token supply distributed to date.

Since MORPHO is expected to be claimable on Base, it’s reasonable to assume that there should be significant trading activity on Aerodrome, where our supercharged LST product has been deeply integrated and grown to a nine-figure TVL in less than three months. Super OETH has proven to be superior when compared to vanilla WETH thanks to its double-digit APY and deep exit liquidity at a price of less than one basis point above 1:1. This creates a compelling reason for tokens to be paired with Super OETH instead of WETH for improved capital efficiency. Liquidity providers will soon be able to earn yield from the Ethereum Beacon chain directly on Base while pairing Super OETH with tokens like MORPHO.

Suggestion

While we’re excited for many token issuers to begin deploying Super OETH pools, the Origin DAO is in a unique position to create value for both OGN holders and a strategic partner — Morpho — by providing liquidity in a superOETHb/MORPHO pool. I’m recommending that we swap a portion of the accumulated MORPHO tokens and provide liquidity as follows:

• Swap 25% of all available MORPHO earned by OUSD and OETH for WETH
• Mint Super OETH using the resulting WETH
• Pair the resulting Super OETH with another ~25% of the DAO’s MORPHO in a newly deployed Aerodrome volatile AMM pool.
• Continue to hold the remaining ~50% of the MORPHO in the Guardian multi-sig account.

If this proposal is approved, the Guardian account signers will be authorized to take the actions described above and make any necessary implementation decisions regarding pool fees, token bridging, etc.

By becoming a liquidity provider for MORPHO, the Origin DAO will further align its interests with one of DeFi’s premier blue chip protocols and drive additional benefits for Super OETH at the same time. A pool like the one proposed here has the potential to drive substantial trading volume for Super OETH, which will lead to additional integrations and contribute to the token’s long-term sustainability.