USDS Allocations: Update In the past 24hrs IMF has received community feedback in relation to dynamic interest rates. We are actively improving our risk models, working with our risk curator to reduce risk for lenders and for listed projects. Pulling back borrow power here is not punishment, it is protection. Below are responses to the most common questions. Q: Why are interest rates so high? The IMF protocol uses Morpho's Interest Rate Manager contracts, which adjust rates with supply and demand. This is how the system protects itself. Recently we reduced liquidity in MOG to protect lenders because the market was overexposed. The spike in interest rate is a temporary side effect of de-risking. Once conditions stabilize and utilization improves, rates will settle back down. This is a short-term safeguard to keep the vault healthy for the long run and how the Morpho contracts work. IMF does not set the interest rate. The good news: we are already seeing corrections within the past 24 hours due to the allocation change. Reducing liquidity is not just about lenders - it also shields projects like MOG from cascading liquidations and deeper market damage. Protecting the protocol means protecting the communities we loan to. Q: Why not just allocate more liquidity? Adding more liquidity right now would only push the problem down the line and make the next correction worse (while markets in general are trending down). More exposure means higher liquidation risk and a greater chance of bad debt. By reducing allocations, we are mitigating the damage. We know it’s painful - but when conditions are more optimistic again, liquidity can scale back up safely. Q: Why are you hurting holders with any interest rate rise? Holders are our core user base. We’re not here to hurt holders - we have to protect them. The hard truth is some markets were overexposed. If we did nothing, lenders could get wrecked and that risk would bleed straight back into borrowers too. De-risking is not fun in the moment, but it keeps vaults sustainable so everyone can keep using their tokens and IMF over the long term. We manage risk by managing allocations, and the Morpho contracts change interest rates based on utilization. Q: What about rewards? Shortly after launch, we ran an incentive program (about 10% of supply going to Moggers and IMF users). Rewards were used to onboard users and jump start the protocol. Rewards are not a standard issue, nor should there be any expectation on these. These are Rewards - used help the protocol grow and benefit friends of IMF. The focus now is on strengthening models so we can underwrite more risk safely. When conditions improve, allocations and rewards can scale again.