Summary
If the community decides to move forward with the migration and sunset process for the legacy platform, we recommend implementing the following incentive adjustments as a transitional step. These changes are designed to gradually reduce emissions and align with the upcoming full deprecation of the platform, ensuring a smooth and cost-efficient wind-down.
Key Changes
- Total emissions reduced by 75%, from 1,621 to 400 daily reward tokens.
- esSEAM rewards are now exclusively directed to supply-side incentives, increasing their share from 272 to 400 to support liquidity provisioning.
- Targeted reward supply APYs were introduced to guide the new esSEAM distribution:
- USDC: 0.9%
- WETH: 0.7%
- All other assets (except SEAM): 0.5%
- All borrow-side incentives across all assets have been discontinued.
- SEAM rewards have been fully removed, both on the supply and borrow sides.
| Token Symbol | Reward Token | Side | Current Daily Reward Emission | Recommended Daily Reward Emission |
|---|---|---|---|---|
| USDC | esSEAM | Supply | 75 | 225 |
| cbBTC | esSEAM | Supply | 15 | 25 |
| WETH | esSEAM | Supply | 15 | 105 |
| EURC | esSEAM | Supply | 44 | 6 |
| wstETH | esSEAM | Supply | 38 | 9 |
| AERO | esSEAM | Supply | 36 | 8 |
| cbETH | esSEAM | Supply | 20 | 8 |
| DAI | esSEAM | Supply | 10 | 2 |
| SEAM | esSEAM | Supply | 4 | 4 |
| weETH | esSEAM | Supply | 0 | 8 |
| USDC | esSEAM | Borrow | 870 | 0 |
| WETH | esSEAM | Borrow | 147 | 0 |
| EURC | esSEAM | Borrow | 58 | 0 |
| cbBTC | esSEAM | Borrow | 58 | 0 |
| AERO | esSEAM | Borrow | 15 | 0 |
| EURC | SEAM | Supply | 4 | 0 |
| wstETH | SEAM | Supply | 4 | 0 |
| AERO | SEAM | Supply | 2 | 0 |
| weETH | SEAM | Supply | 5 | 0 |
| USDC | SEAM | Borrow | 128 | 0 |
| WETH | SEAM | Borrow | 48 | 0 |
| cbBTC | SEAM | Borrow | 20 | 0 |
| EURC | SEAM | Borrow | 5 | 0 |
- Total Recommended Daily Reward Emission: 400 (Current: 1,621)
- Total Recommended Daily esSEAM Emission: 400 (Current: 1,405)
- Total Recommended Daily SEAM Emission: 0 (Current: 216)
- Total Recommended Daily Reward Emission for Suppliers: 400 (Current: 272)
- Total Recommended Daily Reward Emission for Borrowers: 0 (Current: 1,349)
Analysis
Retro
We assess the protocol’s profitability by measuring the net growth in daily reserves.
Net daily reserve growth is calculated by subtracting daily SEAM distribution costs and time-weighted esSEAM distribution expenses from daily reserve gained.
Given the one-year linear unlock period for esSEAM, their expense are not realized immediately but instead gradually over the lock duration. The time-weighted cost for any given day is calculated as follows:
The chart below highlights the protocol’s profit trajectory from March 1 to March 23, 2025. Importantly, net daily reserve growth showed a strong recovery—bouncing back from negative returns seen in previous cycles. Shortly after the rewards adjustment was implemented, growth turned positive and remained consistently above zero, marking a clear turnaround in performance.
As migrations continue, we recommend maintaining a gradual reduction in rewards to support the sunset process.
Supply Incentives
esSEAM ROI
Using the ROI metric above, we can calculate the ROI gained from esSEAM incentives for all incentivized assets from Feb 23 through Mar 23, 2025. Below shows ROI trends and density plots.
The table below shows the distribution statistics of ROI distributions.
| symbol | mean | std | min | 25% | 50% | 75% | max |
|---|---|---|---|---|---|---|---|
| AERO | -121.53 | 1083.3 | -3023.32 | -553.01 | -94.19 | 264.56 | 3536.93 |
| DAI | -8.73 | 163.31 | -594.95 | -34.71 | 7.48 | 42.18 | 352.04 |
| EURC | -255.97 | 721.61 | -2151.53 | -230.5 | -14.12 | 72.03 | 650.29 |
| SEAM | -22171.1 | 150917 | -388918 | -46601.8 | -19984.4 | 5041.23 | 545706 |
| USDC | -5446.05 | 16400.4 | -85394 | -1906.63 | -589.67 | 123.82 | 1180.15 |
| WETH | -10358.2 | 48896.1 | -229695 | -13968.6 | -1318.21 | 4475.48 | 63548.9 |
| cbBTC | -1904.94 | 5733.68 | -20688.5 | -3862.24 | -574.97 | 1133.02 | 9534.15 |
| cbETH | -936.42 | 3954.7 | -17722.9 | -883.23 | -196.52 | 434.87 | 6298.94 |
| wstETH | -775.27 | 4495.99 | -21422.2 | -578.88 | -153.25 | 202.78 | 4722.45 |
We use the mean value to assess general ROI over the period in question. However, we recognize that ROI exhibit highly skewed distributions with large standard deviations. This implies that the mean value may not accurately represent the underlying distribution and can be significantly affected by outliers. Therefore, we scale the mean value with standard deviation as adjusted ROI.
This adjusted metric allows us to normalize the mean ROI, making it less sensitive to outliers and providing a more accurate representation of the performance of each asset. By doing so, we can better compare assets with varying levels of volatility and ensure that our rewards distribution more accurately reflects their “uncertainty-adjusted” returns.
| symbol | Adjusted ROI | Current APY |
|---|---|---|
| AERO | -0.1122 | 0.0244 |
| DAI | -0.0534 | 0.0421 |
| EURC | -0.3547 | 0.0493 |
| SEAM | -0.1469 | 0.0002 |
| USDC | -0.3321 | 0.0027 |
| WETH | -0.2118 | 0.0012 |
| cbBTC | -0.3322 | 0.0028 |
| cbETH | -0.2368 | 0.0119 |
| wstETH | -0.1724 | 0.0215 |
Although ROI has remained negative across all assets during the last cycle, we recommend maintaining supply-side incentives in the near term to support healthy liquidity. These incentives can be gradually phased out over the coming month.
The chart below illustrates the spread between borrowing and supply rates for USDC and WETH. USDC’s spread has typically ranged between 0.8% and 1.1%, while WETH’s has been between 0.6% and 0.8%.
In terms of supply APY, Seamless has maintained competitive rates across supported assets.
In light of these dynamics, we propose distributing esSEAM rewards to target a supply APY of 0.9% for USDC, 0.7% for WETH, and approximately 0.5% for all other assets. The current emission level for SEAM would remain unchanged.
| token_symbol | Current Daily Reward Emission Amount | Recommended Daily Reward Emission Amount | Current APY | Target APY |
|---|---|---|---|---|
| USDC | 75 | 225 | 0.3% | 0.9% |
| EURC | 44 | 6 | 4.9% | 0.5% |
| wstETH | 38 | 9 | 2.1% | 0.5% |
| AERO | 36 | 8 | 2.5% | 0.5% |
| cbETH | 20 | 8 | 1.2% | 0.5% |
| WETH | 15 | 105 | 0.1% | 0.7% |
| cbBTC | 15 | 25 | 0.3% | 0.5% |
| DAI | 10 | 2 | 4.3% | 0.5% |
| SEAM | 4 | 4 | 0.0% | 0.0% |
| weETH | 0 | 8 | 0.0% | 0.5% |
SEAM ROI
Using the same methodology, we have SEAM ROI as follows:
| symbol | Adjusted ROI | Current APY |
|---|---|---|
| AERO | -0.1301 | 0.0014 |
| EURC | -0.3577 | 0.0045 |
| weETH | 0.1978 | 0.0039 |
| wstETH | -0.1769 | 0.0023 |
We suggest removing SEAM incentives immediately to reduce overall costs.
Borrower Incentives
As part of the protocol’s ongoing strategy to migrate liquidity from the legacy platform to Morpho Vaults — as detailed in this forum post — we recommend discontinuing all borrow-side incentives across all assets, as borrow-side incentives are less efficient than supply-side incentives in driving sustainable liquidity.
esSEAM Recommendations
| token_symbol | Current Daily Reward Emission Amount | Recommended Daily Reward Emission Amount |
|---|---|---|
| USDC | 870 | 0 |
| WETH | 147 | 0 |
| EURC | 58 | 0 |
| cbBTC | 58 | 0 |
| AERO | 15 | 0 |
SEAM Recommendations
| token_symbol | Current Daily Reward Emission Amount | Recommended Daily Reward Emission Amount |
|---|---|---|
| USDC | 128 | 0 |
| WETH | 48 | 0 |
| cbBTC | 20 | 0 |
| EURC | 5 | 0 |