The Morpheus Farming Opportunity
The first truly fair launch Crypto x AI project?
With many of the most hyped Crypto x AI projects on the horizon being VC bags (io.net, Ritual…), Morpheus bucks the trend as an entirely fair launch project which is harvesting the yield from a pool of community-sourced stETH…
What is Morpheus?
The goal of Morpheus is to build a protocol to support Smart Agents, general purpose AIs that can execute Smart Contracts on behalf of users. Users would talk to their Smart Agent in natural language and the Smart Agent would take on-chain actions based on their intent or approval. In their view, this opens Crypto up to the general public in the same way that Google’s search engine opened up the Internet in the late 1990s.
Morpheus is acting as the network or facilitator for this vision and requires 4 key contributors to work in harmony for the vision to play out:
a community of builders who create interfaces - frontends / tools to bring users into the Morpheus ecosystem
a community of coders contributing to Morpheus software/agents
capital providers bringing liquidity and funding for compute and code
providers of computation, storage and bandwidth
All of these contributors are to be rewarded using tokenomic incentives in keeping with their contribution to the network.
The native token MOR is emitted each day using the following distribution: 24% to the community, 24% to capital, 24% to compute, 24% to coders, and 4% for protection funds.
MOR Tokenomics
The MOR token supply is limited to a max of 42m tokens which are distributed via proof of work (labor) and proof of stake (capital) depending on the contributor group in question. Notably, Morpheus have not raised any private money; with no pre-mine or early token sale, Morpheus is a completely fair launch with their only funding source being the foregone yield of stETH deposits. There is currently ~125k stETH in the deposit contract which yields roughly $14m annually at current market prices. Half will be traded into MOR and half will be LP’d against that MOR forever as protocol owned liquidity. This will provide a small continual source of demand for MOR and a growing liquidity pool over time.
MOR emissions over time look like this:
As with almost every Crypto protocol, by the end of the 16 year period, fees are expected to be the primary economic driver in a world where MOR emissions will no longer be needed. In the near term, MOR is primarily a means for economic incentivisation but as the network achieves usage a balance will emerge between block rewards (MOR emissions) and fees paid in MOR to use the network.
One thing to add on the tokenomics front is that the circulating supply will be very tight at launch (roughly 2% of float). As a function of supply vs demand, it is likely that the FDV will be very high as a result which could produce healthy returns for farmers (see below) and/or those who ape quickly should MOR launch at a reasonably low valuation.
How to farm MOR?
As alluded to, Morpheus is a fair launch project which is funding its protocol owned liquidity using the stETH yield of stETH depositors into the protocol. These stETH depositors are being incentivised with MOR emissions which they will receive on May 8th. This farming program began on February 8th.
The APRs shown in the following table are only true as of when this report was written but here is a rough estimation of what depositing stETH might yield in terms of APR from now until May 8th:
Play around with the variables here.
Conclusion
To conclude, as the first truly fair launch AI protocol with an ambitious long term vision, Morpheus has certainly piqued our interest. Right now the only way to play MOR is by depositing stETH into the Capital Contract as discussed above. Depending on the FDV at launch this could be a very productive use of ETH with the APR likely realising at above 100%. Equally, with the very tight circulating supply at launch, buying immediately should the token launch at a reasonable valuation could be another way of playing Morpheus. We will be monitoring this one closely!
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