Project Name: Morpheus | Project Type: Smart Agents — Artificial Intelligence (AI) | Ticker: $MOR | Cryptocurrency Rank: N/A | Market Cap: N/A | FDV: N/A | Circulating Supply: N/A | Max Supply: 42m

Opening Remarks

We’ve recently reviewed several AI projects, underscoring the growing focus on artificial intelligence and its expected significant influence in the forthcoming years. At the same time, there’s an increasing demand for open-source large language models (LLMs). Notably, these LLMs often lack essential features such as user-friendly interfaces and efficient management of user data. To address these shortcomings, the Smart Agent Protocol has been introduced.

It facilitates the management of local LLMs via Web3 wallets, enhancing the user experience and control.

With the autonomous AI market poised for substantial growth and numerous key players predicting that AI will play a key role in the mainstream adoption of cryptocurrency, Morpheus presents a challenge to the centralised AI sector with its innovative network of AI agents, offering a transparent and equitable launch strategy that positions it as a critical player in the future landscape.

Project Overview

MorpheusAI marks a significant advancement in combining AI with blockchain, particularly for Web3. It moves beyond traditional smart contracts, which are reactive, to utilise AI smart agents for proactive, real-time decision-making. This shift from basic automation to sophisticated, autonomous task management is powered by advancements in Large Language Models (LLMs), merging AI’s analytical capabilities with blockchain’s efficiency and security.

MorpheusAI not only enhances various sectors like service marketplaces and crypto gaming by enabling complex AI-driven tasks but also integrates seamlessly with Web3 technologies. It offers APIs, decentralised cloud services, and easy integration with crypto tools and DApps, aiming to make personal AI agents, or Smart Agents, widely accessible. These Smart Agents can interact with users’ wallets, DApps, and smart contracts, bridging the gap between traditional and blockchain technology.

By allowing natural language communication with Smart Agents and proposing a network supported by a token system to incentivize development and usage, MorpheusAI facilitates a user-friendly and innovative approach to AI in blockchain. It stands as an open-source alternative in a field dominated by closed-source models, providing a secure, efficient solution that enhances the blockchain ecosystem for developers and users alike.

Morpheus Key Features

• Web3 Integration: Morpheus is inherently Web3 native, enabling users to engage in cryptocurrency transactions, utilise smart contracts, and access DApps and DeFi services, surpassing the capabilities of current LLMs that lack direct Web3 connectivity.
• Decentralisation and Cost Efficiency: By operating on a decentralised public infrastructure, Morpheus avoids the regulatory and cost barriers faced by centralised entities, offering a more affordable and flexible solution for AI deployment and usage.
• Developer-Friendly Platform: Morpheus serves as a Linux-like alternative for developers, facilitating the quick creation of new agents or LLMs without incurring costs, while ensuring data ownership and security.
• Innovative Reward System: The platform incentivizes contributions across various roles, including capital providers, coders, compute providers, and community builders, through a token-based system that rewards participation and contribution to the Morpheus ecosystem

Morpheus Approach

• Capital Proof & Reward

Capital providers support the network by providing stETH, generating yield, and contributing to Protocol-owned Liquidity (PoL). This mechanism ensures liquidity for the ecosystem, rewarding capital providers with $MOR tokens proportional to their contributions.

• Code Proof, Registration & Reward

Developers contribute code to the Morpheus Network, earning rewards based on their contributions’ value. This system encourages the development of specialised agents and tools, enhancing the platform’s capabilities and user experience.

• Compute Proof & Reward

Compute providers offer necessary resources for AI models, receiving compensation based on demand. This approach ensures efficient use of resources and rewards providers for their contributions to the network’s computational needs.

• Community Builder Proof, Registration & Reward

Community builders develop and provide user interfaces and developer tools, facilitating interaction with the Morpheus API. They are rewarded based on the fees generated by their contributions, promoting the development of a vibrant and supportive ecosystem.

Morpheus Tech

• Tech Stack and Smart Contract Development: Morpheus utilises the Ethereum blockchain and its ERC20 standard for the MOR token, with plans to expand to other Ethereum layer 2 solutions and compatible blockchains for broader adoption and functionality.
• User Data Security: Prioritising data security, Morpheus plans to adopt Fully Homomorphic Encryption (FHE) for LLMs, ensuring enhanced protection for user data within the peer-to-peer network.
• Bootstrapping and Network Growth: A bootstrapping period will facilitate the initial distribution of MOR tokens, ensuring a balanced and equitable start for the network. This phase is critical for establishing a stable foundation for Morpheus’s growth and utility.

Tokenomics

Distribution and Rewards

• Daily Distribution: $MOR tokens are allocated daily, with 24% each to the community (builders and creators who develop tools and frontends that drive user engagement and growth), capital providers, computational resources providers, and coders, plus an additional 4% reserved for protection funds.
• Total Supply: The cap for $MOR tokens is set at 42M, with no pre-mine or early token sale, ensuring a fair launch that took place the past 8th of February.
• Block Rewards: Starting at 14,400 $MOR per day, the reward decreases daily until it reaches zero on day 5,833, transitioning the incentive model from block rewards to transaction fees.

The Utility of MOR Token

$MOR serves as an on-chain accounting mechanism, facilitating transactions within the Morpheus network, such as:

• Payments from developers to compute providers for API calls.
• Transactions for specialised Agents created by developers.
• Rewards for users providing training data for new LLMs/Agents.

Phases of Tokenomics

Near-term: At Launch

• Capital Providers: Receive $MOR proportional to their stETH contributions.
• Compute Providers: Compensated in $MOR for processing user prompts.
• Coders: Rewarded in $MOR for contributions to Morpheus software.
• Community Builders: Earn $MOR for engaging front ends, tools, and value-added services.

Mid-term: Wider Circulation

• A balance develops between block rewards and transaction fees across all roles.

Long-term: Deep Liquidity

• Transaction fees become the primary incentive mechanism across the ecosystem.

Tail Emissions Strategy

To ensure longevity and ongoing incentive alignment, Morpheus adopts a “tail emission” strategy:

• Post Block Rewards: After the initial distribution period, a tail emission based on 50% of the burned $MOR tokens ensures continued rewards. This $MOR tail emission will start after the last $MOR tokens have been emitted on day 5,833 of the distribution schedule (16 years approx).
• Circulation Cap: Tail emissions are capped at 16% of the tokens in circulation, maintaining the scarcity and value of $MOR.

By ensuring that tail emissions are only a portion of the burned tokens, the total circulating supply of MOR will not exceed the hard cap of 42 million. In fact, because some tokens are burned and only partially replaced, the total supply of MOR could become increasingly scarce over time. This approach allows the Morpheus ecosystem to maintain a balance between incentivizing participants and ensuring the scarcity of MOR tokens.

The chart below shows how many $MOR tokens are available over time, starting from the first 5,833 days and extending from year 17 to year 256. It assumes that, on average, 25% of $MOR tokens are destroyed or “burned” during this time.

Competitors

Olas (previously Autonolas) is at the forefront of the AI smart agents sector and is considered one of Morpheus’s main competitors. We’ve already discussed Autonolas in detail, comparing it with Morpheus and Fetch.ai, so I’ll just give you a brief overview here. Autonolas stands out for its blockchain flexibility, as it operates across multiple blockchain platforms, which boosts its adaptability and wider adoption. It specialises in creating and deploying autonomous agents for developers, dApps, and users, with a strong focus on shared governance and ownership.

On the other hand, Morpheus focuses on making AI and computing power as widely available as personal computers and smartphones. It emphasises giving individuals the ability to personally own and use AI agents and computing resources, going beyond AI to encompass a broader range of computing capabilities.

While these two projects are competing for market share, they actually have goals that complement each other. Autonolas focuses on the governance of autonomous agents across different blockchains, whereas Morpheus concentrates on providing personal access to AI and computing resources. This difference in focus suggests that there could be opportunities for mutual benefits and collaboration between the two.

In summary, Autonolas offers a blockchain-independent platform for the governance and co-ownership of autonomous agents, while Morpheus seeks to put AI and computing power directly into the hands of users.

Bullish Fundamental Factors

• Since its debut, 1% of all Lido stETH has been staked in the Morpheus Capital Provider Smart Contract, amounting to 99,717 stETH within just 20 days.
• MorpheusAI has introduced a novel reward mechanism that actively compensates various contributors with $MOR tokens, fostering a collaborative and incentivized ecosystem.
• The rapid advancement of AI technology is leading to AI agents increasingly substituting human labour across different sectors. Anomica Brands’ CEO predicts that 70–80% of transactions will soon be conducted through autonomous AI agents, pointing to a transformative shift in transaction methods.
• The DeAI sector has seen a significant rise in popularity, especially after the introduction of ChatGPT. It ranked #1 in CoinGecko’s 2023 search traffic by sectors, indicating a growing interest despite its small share in the total cryptocurrency market cap.
• As the founder of MorpheusAI, David Johnston has been at the forefront of decentralised technology, introducing “Dapps” in 2013 and later “Smart Agents” in 2023.
• MorpheusAI’s active participation in significant events like the 2023 Decentralised AI Summit showcases its commitment to leading and shaping discussions within the decentralised AI space.
• MorpheusAI sets itself apart with distinctive features such as the Techno Capital Machine (TCM) and its commitment to a fair launch, positioning it to significantly impact the agent sector.
• Considering the valuations of comparable agent projects like OLAS ($3.5B FDV) and FET ($1.5B FDV), MorpheusAI exhibits immense potential for growth, supported by a substantial Total Addressable Market (TAM).

Bearish Fundamental Factors

• Like any project that leverages blockchain and AI, Morpheus is susceptible to security risks, including smart contract vulnerabilities and potential AI model manipulation. Any significant security breach could severely impact trust and user adoption.
• The success of Morpheus also hinges on its ability to offer a user-friendly experience. The technical complexity of managing AI agents and blockchain operations could deter non-technical users, limiting its adoption.
• Bearish market conditions or loss of investor confidence in crypto assets could indirectly affect the project’s performance.
• The economic model of Morpheus, including its tokenomics and incentive structures, needs to prove sustainable in the long term. Any flaws in the design could lead to issues with liquidity, token value stability, and overall project sustainability.
• Convincing users to transition from traditional AI platforms and services to a decentralised model might be challenging.
• The actual implementation of its vision faces significant technological hurdles, including scalability, interoperability between different blockchains, and ensuring the AI models’ effectiveness and security.

Closing Remarks

As always, we hope you found this read informative and engaging. If so, we invite you to connect with us on LinkedIn, explore our website for more insights, and follow us on X for the latest updates. Additionally, you can discover more of our research through our LinkedIn profile or on our Medium page.

Disclaimer

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