Compound <> Morpho <> Polygon Collaboration

Proposals
21

Was under the impression WOOF! was dedicated. If Compound needs more, an open call could produce a great outcome. Morpho could be invited. Or keep pushing this. Just options.

I believe Compound is its interest rate :key:, so this isn’t sensible (and somewhat offensive to those making an effort but understandable from the POV of having massive Morpho bags).

If they’re seriously the future of lending on Ethereum, Gauntlet might have a point. What that’d mean for Compound tho, i’m afraid is not fantastic. It’d be a pre-mature move today IMO, but I am all for acceleration. I wonder what more of the community desires.

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22

Hi @Gauntlet and Compound community!
We see this proposal as a great opportunity to revitalize Compound’s presence and strengthen its brand in the DeFi ecosystem.

With Aave reducing its activity on Polygon, there’s a clear opening for Compound to capture more market share. Despite Aave’s shift, it still holds over $300M TVL on Polygon, according to DeFiLlama. This demonstrates that significant liquidity remains on the network, and Compound has a strong opportunity to attract users seeking alternative lending solutions.

While Morpho is a competing protocol, this integration enables Compound to offer a competitive lending product with both high yields and low borrowing costs. Considering these factors, it has the potential to be a catalyst for Compound’s growth and liquidity expansion.

Gauntlet has consistently demonstrated strong risk management capabilities within Compound. As one of the top curators for Morpho, they also understand the underlying mechanics extremely well. We’re confident Gauntlet can oversee this vault with the same diligence and expertise, ensuring both security and efficiency.

While the initial incentive program will likely drive TVL expansion in the early stages, ensuring user retention post-incentives will be crucial.
We believe there is room for further discussions around adding new assets and optimizing reward structures to support sustainable long-term growth.

Given the current decline in Compound’s market presence, this proposal presents a strategic opportunity to re-energize the ecosystem.
Tané supports this initiative and looks forward to its potential impact.

We’d love to hear the community’s thoughts as well. Thanks!

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23

I dont understand this point:

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24

There is talk in this thread to adopt Morpho’s interest rates and represent them as Compound’s. What I noted states Compound maintaining its own interest rates is key imo. I mean, if Compound adopts another’s interest rates, it totally changes Compound’s value prop.

In regards to the second point there, I want to be clear I don’t see issue with being “somewhat offensive” if a good point is being made. Whether the one here is agreeable (that Compound is declining for the specific reasons mentioned) is up for debate.

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25

I’ve been closely following this proposal over the past week, and as a long-term COMP holder, I feel compelled to speak up.

Gauntlet is presenting Compound’s protocol as inefficient, highlighting some missing optimizations. But does that justify abandoning Compound in favor of Morpho? That notion is absurd. If Compound itself refuses to use its own product, it raises serious concerns. Why would anyone continue to believe in the project?

This proposal offers no clear benefits to COMP holders. In fact, it’s baffling how they’re being misled into believing otherwise. The entire situation feels deliberately opaque, riddled with conflicts of interest. Gauntlet profits from Morpho, holds Morpho tokens, and simultaneously possesses COMP tokens while acting as a risk consultant for Compound. That’s a major ethical issue.

I doubt I’m the only one seeing the problem here. The proposal appears less about improving Compound and more about weakening it, while Morpho and Gauntlet stands as the beneficiary.

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26

I wasnt going to chime in on this thread again but wow, here I am.

What is your suggestion to grow Compound @comptimistic? At least Gauntlet is trying something. The benefit to Compound is utilizing the Morpho tech stack which is seeing major adoption. If the Compound DAO is earning the revenue from this idea (it is) then what is the hang up?

As far as I knoww there are no teams developing a Compound V4. So
 what’s next?

Love throwing stones with no suggestions on how to improve the status quo. Lol, tired of people doing this

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27

@Comptimistic is a new forum account that was created as of Feb 6th. In my opinion, this is a proxy account someone is using to undermine this proposal without being directly identified.

@Comptimistic Do you have on-chain COMP holdings or delegations you can point to?

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28

@cylon Many watch. He stated he has been watching. Community members should feel comfortable expressing their opinion and not be accused of such for doing just that.

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29

Unfortunately, we live in an adversarial environment where sybil attacks are becoming more common in permissionless governance forums. I’m openly stating my opinion that I think this is a proxy account given the lack of history. I’m happy to be proven wrong with on-chain data that says otherwise but its fair to be skeptical and ask for more information in these circumstances.

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30

With great respect for all your contributions, this is not a permissionless forum. That is why we must strive to respect other’s opinions. We appreciate the mods for keeping things clean. Do you or anyone else in this thread have any investment in Morpho to disclose? I find it extremely odd Polygon founder is willing to incentivize Morpho markets and not Compound’s


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31

By the way, you are acting sus with the accusations and hate against Morpho, seems like you could be the culprit.

Are you dense? Compound x Morpho is an insane value prop for Polygon.

I own Zero Morph tokens. There you go.

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32

Finding something odd is no accusation. @mexilc

Now you’re making stuff up. Morpho is great. Toperators. But, we’re talking about putting money in Morpho TVL with COMP incentives and calling it Compound Growth. Doesn’t add up (to me)

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33

Whoever is making new accounts, please stop and use your real. Don’t be scared. It is ok. They think the accounts are me. Would appreciate if you guys stood up for what you believe.

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34

this is not a permissionless forum. That is why we must strive to respect other’s opinions.

It effectively is permissionless. Anyone can create a forum account and post with lenient moderation on new accounts. I’m fine with that but it does leave open the possibility of proxy accounts. If an account has no prior history and suddenly joins a contentious topic, it’s reasonable to question credibility and ask for information. It’s not out of disrespect for a different opinion and it reflects an opinion of my own that I feel is important to share.

Do you or anyone else in this thread have any investment in Morpho to disclose?

I own far more COMP than MORPH tokens but would like to see both bags grow. I think the given proposal is at least worth discussing.

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35

Gauntlet has published the on-chain proposal here. For additional color, please see the Specification below.

The Polygon team has already transferred 5,400,000 POL tokens to the multisig, which will be used to fund the joint incentive campaigns.

Paperclip Labs has launched a front end for the vaults, and the user interface for supplying and borrowing is intended to be supported on the Compound user interface following community approval.

We appreciate everyone’s feedback across partners, delegates, and service providers to help shape this initiative for the Compound DAO.

Specification

  1. Grant COMP. This call transfers 25,565 COMP from Compound’s Unitroller to Compound’s Timelock on Ethereum mainnet. To calculate the 25,565 amount, we used $58.673 as the 30-day TWAP on 2/24/2025 for the proposal. For $1.5M, this translates to 25565.422 COMP and 25565 rounded to the nearest whole.
  2. Approve Bridge Spend. This call approves the Polygon’s ERC-20 bridge contract to spend the 25,565 COMP tokens from the Ethereum mainnet.
  3. Transfer COMP to Multisig. This call moves the 25,565 COMP tokens from the Ethereum mainnet to the multisig wallet on Polygon. Multisig is 0x82f25d3314Ff32F4E8C9D1608fbAB7fC78559e33. This multisig (which holds the POL tokens) will be used to fund dynamic incentive campaigns using Merkl, which Gauntlet has used in the past. For this Compound initiative, Merkl has agreed to lower their fee to 1.5% of the incentives processed through their technology stack. The multisig is a 3 of 6 multisig with two Gauntlet signers, two representatives of the Compound Working Group who have undertaken KYC with Polygon, and two representatives from Polygon.
  • Gauntlet 1: 0x45d79e456c1a1faa24AdCDCd6EB3Ac2D05B64925
  • Gauntlet 2: 0x1D8e0b8F4CEd9262C9ac0c0870BF8B45D74ad9D9
  • Jun (Compound Working Group): 0x9A73D57BB1fB280C5672A13f655675De25F13b70
  • Abdullah (Compound Working Group): 0x3d0e30031b547737fFCf13c127350159A6C4ce17
  • Polygon 1: 0x54DFA4B635E7eB98515fEBA81d360A3871739277
  • Polygon 2: 0x0A4857fD89ABfB7536a6D0Bd4400EF769E84Ec8b
  1. Accept Ownership of Morpho Vaults. The 4 vaults are USDC, WETH, USDT, and WPOL.

We thank the community for their deliberation and support.

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36

I’m not trying to talk shit, I just think we can do better.

Straight to the jugular, The Morpho/Polygon deal, as it stands, isn’t fully baked. There’s significant risk, and the timeline for Compound earning the $1.5M of COMP back is pretty fuzzy. Gauntlet’s current strategy relies on linear liquidity mining incentives with Merkl and market curation. Linear distribution is a beta approach that was the leading strategy during DeFi summer. I believe we can do better.

So we are throwing down the gauntlet in front of Gauntlet (pun intended) to show that our strategies can drive higher TVL and utilization. With the goal of retaining the current AAVE TVL on Polygon while driving some new narratives. APR pump and isolated market curation alone won’t totally solve the issue. We believe we need to build a story around this challenge. This way we can draw in eyeballs to Compound and the entire crypto ecosystem. With the right mix of distribution channels, user acquisition, and integration partners, we can deliver a bigger, faster ROI than what’s on the table right now.

More than Incentives. Distribution is King.

A ton of projects drop token incentives and hope that’s enough. But that’s only one third of the equation. The next third is telling a story that gets people excited, with the final third is choosing the right channel partners. APR in a vacuum doesn’t cut it. You need to be at the center of conversations on crypto Twitter, in Telegram groups, and with the big trading desks that move millions. We won’t even be on the Morpho frontend. What kind of distribution numbers does Paperclip historically have? Our track record with Arbitrum LTIPP shows we know how to amplify incentives so they aren’t just free money but a driver of sustainable growth.

A Hybrid Approach for TVL Recapture

Why rely on a single method for bringing in liquidity when we can stack multiple tactics on top of each other? Here’s our plan:

  1. One-Click Migrator
  • Lower friction equals higher adoption. We’ll build or partner on a tool that lets users seamlessly move funds from other lending protocols into Compound in one or two clicks.
  1. Uni V4 & Bunni Protocol Partnership
  • Take out-of-range LP positions on Polygon and automatically re-position them to earn more within Compound. It’s a quick way to free up capital that’s just sitting idle.
  1. Loops & Integrated Utilization
  • The majority of Lending markets is Levered loops. Understanding this, we will concentrate on Loops that drive the most utilization for Polygon
  1. New Tokens to Hedge and leverage
  • We will explore Polymarket integrations and look to integrate Spiko RWAs for atomic liquidations or internalizing OEV. This can drastically increase borrow demand while keeping capital efficiency high.

The Metrics: Capturing up to 76% of Borrowed TVL

Right now, about $114M is borrowed on AAVE Polygon with $87M in major assets USDT, USDC, ETH, MATIC. A Compound v3 market targeting these assets could reasonably capture 76% of that. We won’t get it all overnight, but with well-executed incentives and a clear user experience, we can carve out a huge share of that market. We will need to quickly launch 4 markets for Polygon to recapture the value.

Closer ROI Tracking

$1.5M COMP is a big number. We will methodically align incentives with measurable KPIs: user migration volumes, deposit/borrow growth, and the net new value staying in the protocol. We did it with Arbitrum and we can do it on Polygon. You’ll always know how our strategy is performing because we’ll make the data publicly available.

Let AlphaGrowth Prove It.

Competition fuels innovation. Who would like to see some friendly competition on who can distribute incentives more effectively and grow the stickiest TVL. We are ready to help Compound become the obvious destination for lending and borrowing on Polygon.

THE ASK


Let’s split the $3MM of incentives into 2 tranches.

The first tranche will be split $750k to Gauntlet and $750k to AlphaGrowth to distribute on behalf of Compound.

We can analyze the effectiveness and then declare a winner for the 2nd tranche of incentives of $1.5Million.

If we combine the best in class of market curation and incentive distribution. Compound will succeed on Polygon. Whichever party wins, we are ready to put Compound firmly in the driver’s seat on the AggLayer.

Bryan Colligan & the AlphaGrowth Team

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38

The proposal had several months of discussion and Gauntlet as well as Morpho acted in good faith to clarify and respond to questions that are being addressed. As @OneTrueKirk notes, Spark team has a vault via Morpho which has become popular and it will be used more multichain.

Polygon team also committed and transferring POL is also a positive sign of collaboration and growth. Therefore we are in positive view of the proposal. In terms of Alpha Growth’s counter proposal, I don’t necessarily believe it’s mutually exclusive and that Gauntlet’s plan can work in together with Alpha Growth’s plan in the future.

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39

I think a simple migrator is a great idea, but hasn’t a ton of work by Gauntlet and Polygon already been done? Wouldn’t it piss off Polygon at this point?

I have seen TVL capture be done multiple ways, but I think we should vote on Gauntlet’s approach that is already being voted on right now. This post is a little late in my opinion. Let the on-chain vote complete. If denied, then vote on this.

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41

Gauntlet, in collaboration with Polygon, Morpho, Merkl, and Paperclip, has structured this trial initiative to drive sustainable growth for Compound. This proposal builds on months of coordination with commitments from aligned partners. If there are alternative approaches, AlphaGrowth or any other entity is free to propose them to the DAO separately.

Established Commitments:

Gauntlet has coordinated with Polygon, Morpho, Merkl, Paperclip, and other key contributors to ensure a seamless launch. Polygon has already transferred POL tokens, Morpho vaults are operational, and Gauntlet has integrated Merkl for reliable distribution and claiming of incentives. A specialized front end is in place. The $1.5M in incentives in this proposal is structured around these aligned efforts. If other entities wish to pursue a different arrangement, they are free to do so in their own proposal.

Program Structure:

There seems to be a misunderstanding here. Gauntlet’s approach is not linear: we dynamically adjust incentives based on real-time usage, risk parameters, and demand patterns.

If AlphaGrowth would like to drive growth on Polygon, it is interesting why this growth has not materialized for the Compound Polygon Comet. Should AlphaGrowth propose its plans for the “right mix of distribution channels, user acquisition, and integration partners” in a separate proposal, they are free to do so.

Summary

Gauntlet looks forward to executing alongside partners who have invested significant resources and strategic planning over the past several months. With such a large network of counterparties across DeFi working on this initiative, we are excited to collaborate with professionalism and move swiftly to capitalize on these market opportunities.

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42

It’s not just fuzzy. It is non-existent.

This tone, ahead of approval, is simply disrespectful of DAO processes. One can definitely understand the eagerness, but respecting processes should come first always.

This is stuff of nightmares tbh, but if the community approves it, sure.

People acting like it is approved when it is not. How is that good?

It’s confusing to hear such an ask so late in the discussion.

Let’s see how the vote goes and thank you Gauntlet for putting all this together. Even if I don’t agree with the direction, I can respect the effort and drive you have displayed.

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