Morpho Raises $175M to Expand DeFi Credit Network

Funding round lifts Morpho’s institutional profile

The round brought together crypto-native venture firms, fintech investors and traditional finance-linked backers. Paradigm, a16z crypto and Ribbit Capital co-led the investment, while Apollo Funds, Circle Ventures, VanEck and Ledger Cathay also participated.

Additional participating backers included Variant, Wintermute Ventures, Prelude, IOSG, Hashkey, Mirana, NJJ Capital, SBI Group, Bpifrance and other strategic investors. The round reportedly moved Morpho’s valuation to $2 billion, with one file specifying that the project’s fully diluted valuation reached as high as $2 billion.

Morpho cofounder Paul Frambot told Ben Weiss that investors bought Morpho’s native tokens based on their average monthly price, meaning the exact token price varied depending on when each investor joined the round.

Morpho had previously raised $68 million across two rounds. Earlier backers included Coinbase Ventures, Pantera Capital and Nascent. The latest financing was described as the project’s fourth institutional fundraise since 2021.

Morpho pitches itself as open credit infrastructure

Morpho operates as an open blockchain-based credit network that connects borrowers and capital providers through programmable lending infrastructure. The protocol allows users to create isolated lending markets with custom risk parameters, a structure designed to let different lending pools operate under separate rules.

The protocol has helped popularize curated lending vaults, which resemble funds because risk managers can define how user capital is automatically allocated across crypto-backed lending markets. Frambot described Morpho’s strategy as building infrastructure “for people to build their own Aave.”

Frambot, who launched Morpho at age 20 in Paris, founded the project alongside Merlin Egalite, Julien Thomas and Mathis Gontier Delaunay. Frambot said finance has been held back by “dated infrastructure,” “fragmented systems” and “extractive intermediaries,” and said Morpho is building the “open credit network for the world.”

Morpho said the new capital will be used for infrastructure development and commercial integrations with strategic partners. The Morpho Association said it plans to use the funding to strengthen partnerships and build the infrastructure layer it calls the “open credit network.”

Gabe Mennesson, partner at Ribbit Capital, said lending is the “largest profit pool” in financial services, while much of the infrastructure remains fragmented, opaque and inefficient. Guy Wuollet, general partner at a16z crypto, said the investment fits Morpho’s thesis that traditional finance and DeFi are converging.

Wuollet said Morpho’s technology keeps pushing borrowing and lending forward for some of the world’s leading financial institutions, emphasizing its simplicity and security.

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Institutional integrations broaden the protocol’s reach

Morpho says its infrastructure is already used by major crypto and financial institutions, including Bitwise, Galaxy, Anchorage Digital, Coinbase, Kraken and Binance. Another file also said Coinbase, Kraken, Binance, Anchorage Digital and Galaxy Digital have used Morpho’s modular design.

French banking giant Société Générale is already building on Morpho’s platform. Major exchanges including Coinbase and Binance have adopted Morpho’s platform, where customers can earn interest on stablecoins or borrow against digital assets.

The files specifically mention Circle’s USDC and Tether’s USDT as examples of stablecoins users can earn interest on through exchange integrations. Bitcoin and Ethereum were also cited as examples of collateral that users can borrow against.

Coinbase previously used Morpho to revive its Bitcoin-backed lending program early last year, making Coinbase one of the more visible examples of Morpho’s infrastructure being used by a mainstream crypto platform.

The Ethereum Foundation invested in Morpho twice under its treasury framework. Those investments included 3,400 ETH and approximately $6 million in stablecoins. The Ethereum Foundation’s support was tied to its “Defipunk” policy, which works only with projects that have open-source licensing and immutable contracts.

Morpho meets those requirements through its GPL 2.0-licensed architecture. That positioning gives Morpho an Ethereum-aligned infrastructure profile as it targets banks, asset managers, exchanges, fintechs and other financial platforms.

Morpho narrows the gap with Aave

Aave was presented as Morpho’s closest competitive benchmark and the current DeFi lending leader. Aave was cited as having roughly $12 billion in total value locked, while Morpho was cited near $6.6 billion across 37 chains.

The Morpho-Aave rivalry was framed as a major DeFi lending narrative. Morpho is gaining institutional momentum through customizable lending markets, while Aave remains the established leader in onchain lending.

Aave is reportedly executing a 12-month “revenue-led protocol strategy” while promoting its new V4 architecture. The new V4 architecture reportedly attracted more than $100 million in combined deposits and loans last month.

Aave has also faced recent operational and governance pressure. A governance crisis earlier this year reportedly led to the departure of key service providers, including Aave Chan Initiative and BGD Labs, the firm responsible for building and maintaining Aave V3.

Aave was not directly hacked, but it was seriously exposed to a $290 million exploit of KelpDAO in April 2026, which reportedly left Aave with substantial bad debt. Morpho reportedly had only minor exposure to the same incident.

The DeFi sector has also faced broader exploit pressure this year, including the suspected theft of $285 million from Drift by a North Korean-linked hacking group. The raise therefore comes as DeFi lending demand remains strong despite security failures and liquidity stress events.

Borrowers on Morpho face liquidation risk when collateral value drops below required thresholds. When liquidations occur, third-party buyers can buy collateral at a discount, similar to other lending protocols.

Coinbase’s Morpho-powered lending platform recently saw an increase in user losses during Bitcoin’s market decline. During Bitcoin’s plunge to a 19-month low, roughly 2,900 Coinbase customers were liquidated over the past week, according to a Dune dashboard cited in the files.

When liquidations reached record levels in February, Coinbase said users were notified frequently when loans were at risk, “up to every 30 minutes.”