Morpho Lands $175M and Declares Itself the Plumbing for Banker Credit 🏦

Morpho Labs raised $175 million in a funding round led by Paradigm, a16z crypto and Ribbit Capital, the company announced Tuesday, describing the capital as fuel to expand beyond decentralized lending and into credit infrastructure for banks, asset managers and fintechs. Co-founder Merlin Egalite called the raise "the largest raise in DeFi history." The deal highlights where crypto venture capital is concentrating, with investors backing stablecoin-adjacent credit rails rather than DeFi lending alone, according to Spark CEO Sam MacPherson, who told Cointelegraph that as stablecoins scale, "credit becomes one of the most important pieces of infrastructure in the stack."

Morpho, widely identified as a DeFi lending protocol, is positioning itself as underlying credit infrastructure for institutions. Egalite said the company is focused on "establishing ourselves as the credit infrastructure layer that banks, asset managers and fintechs build on." The protocol held a total value locked of $6.72 billion and about $3.47 billion in active loans, according to DeFiLlama data cited by risk management platform Sentora in a Friday newsletter, which described the figures as evidence of "significant liquidity depth." Both metrics have climbed sharply since late 2024.

Sentora also pointed to Coinbase's use of Morpho smart contracts to originate more than $2.17 billion in corporate USDC loans, framing it as evidence that the protocol is functioning as lending infrastructure rather than solely as a retail DeFi platform. The firm said exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems to power credit products, with protocols competing to become the underlying rails for business-to-business integrations.

Morpho plans to use the fresh capital to expand integrations with banks, asset managers and large platforms, attract more institutional capital and roll out features drawn from traditional credit markets over the next 12 to 18 months, Egalite said. The raise lands amid a broader shift in crypto venture funding toward later-stage deals, with a Q1 2026 CryptoRank report showing capital allocated to Series C and later-stage rounds up 1,020% year over year and 320% quarter over quarter, accounting for 28.4% of venture funding across just nine deals.