Crypto Lending Protocol Morpho Raises $175 Million to Aid Wall Street’s DeFi Push

Decentralized lending protocol Morpho has secured $175 million in new funding, highlighting persistent demand for DeFi infrastructure despite a series of recent setbacks for the sector.

The platform, which allows anyone to create isolated lending markets, billed the raise as one of the largest-ever funding rounds for a DeFi platform in a Tuesday announcement. Previously, Morpho obtained $68 million in financing across two rounds, according to Crunchbase.

With $11 billion in user deposits, the protocol has played an outsized role in popularizing curated lending vaults, which resemble funds and allow risk managers to set parameters under which users’ capital is automatically allocated to various crypto-backed markets.

Morpho said the round was co-led by Paradigm and Andreessen Horowitz (a16z)—two of crypto’s largest venture capital firms—alongside Ribbit Capital. Morpho said the raise attracted strategic backing from Apollo Funds, Circle Ventures, and VanEck, with participation from over a dozen other firms.

The protocol has been adopted by leading exchanges such as Coinbase and Binance, enabling customers to earn interest on stablecoins such as Circle’s USDC or Tether’s USDT, or take out loans using digital assets like Bitcoin and Ethereum as collateral.

Morpho’s raise comes amid an uptick in DeFi exploits this year that have tested confidence in the sector, including Aave’s liquidity crisis—sparked by an exploit that hit KelpDAO—and the suspected theft of $285 million from Drift by a North Korean-linked hacking group.

In the announcement, Morpho noted that French banking giant Société Générale is already building on its platform, and that the protocol has ambitions of becoming “a shared credit layer that lets banks, asset managers, and fintechs” build programmable lending products.

“The true value of finance has always been held back by dated infrastructure,” Morpho co-founder Paul Frambot said in a statement. “We’re building the open credit network for the world, connecting those with excess capital to those who need financing, globally.”

Morpho said the funds will go toward infrastructure development and commercial integrations with strategic partners. Prior to its latest round, Morpho received backing from Coinbase, which used the platform to revive its Bitcoin-backed lending program early last year.

As with other lending protocols, borrowers face liquidations on Morpho when their collateral drops in value and crosses a certain threshold, allowing third-party buyers to step in and buy those funds at a discount. Recently, Coinbase’s platform has seen an uptick in user losses.

Amid Bitcoin’s plunge to a 19-month low, roughly 2,900 Coinbase customers have been liquidated over the past week, according to a Dune dashboard. 

When liquidations flared to record levels in February, the exchange told Decrypt that its users are notified frequently when their loans are at risk, “up to every 30 minutes.”