The single biggest source of confusion in Morpheus: the bundled local model is not a Morpheus model. Two things are easily conflated.

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TL;DR

Local modelOn-chain (Morpheus) model
Where it runsYour machine, started by mor-launch localSome provider’s host on the network
CostFree (your CPU/GPU)MOR per second
QualityTiny demo (tinyllama)Whatever the provider hosts (often production-grade)
Wallet neededOptionalRequired (MOR + ETH on BASE)
Session neededNoYes — openSession against a bid
Visible in MorpheusUI as”Local model""Change Model → Remote model dropdown”

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How to know which one you’re using

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In MorpheusUI

Look at the model selector at the top of the Chat screen. If it says “Local Model” you are talking to the bundled llama.cpp server on localhost:8080. If it says a real model name like LMR-OpenAI-GPT-4o, you are spending MOR.

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Via the API

If you are sending prompts to /v1/chat/completions without a session_id header, you are routed to the local backend. With a session_id header, you are routed to the provider that opened that session. See API direct. 
curl http://localhost:8082/v1/chat/completions \
  -H 'Authorization: Basic YWRtaW46YWRtaW4=' \
  -H 'session_id: 0x089111479fa2847106b4f7b17eace2e9b37e0d3c0db331b4e01a6e24de827477' \
  -d '{"messages":[{"role":"user","content":"hi"}],"stream":true}'

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Why the local model exists

It exists only to prove the stack works end-to-end without spending money. The bundled tinyllama is a 1B-parameter demonstration model — it will hallucinate, fail simple tasks, and produce inconsistent output. Comparing its quality to a real Morpheus provider is not a fair comparison.

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When to use what

Use the local model

First-run validation. Smoke testing the pipeline. Demos without a wallet.

Use a Morpheus model

Anything you actually care about. Real workloads. Apps. Agents.
See also Why is my MOR locked? and Local vs blockchain models (anti-hallucination) for an LLM-focused version of this page.