Morpho Labs raised $175 million in a funding round led by Paradigm, a16z crypto, and Ribbit Capital. The DeFi lending protocol aims to evolve into a broader credit infrastructure layer for traditional financial institutions. Investors are shifting focus towards onchain credit markets and stablecoin infrastructure, seeing credit as a critical component for scaling blockchain-based finance.
Investors are increasingly backing stablecoin and credit infrastructure rather than decentralized finance lending alone. This shift in focus is drawing attention to onchain credit markets.
Morpho announced a $175 million funding round led by Paradigm, a16z crypto and Ribbit Capital. While known as a DeFi lending protocol, the company stated its aim is to become a credit infrastructure layer for banks, asset managers and fintechs.
As stablecoins scale, “credit becomes one of the most important pieces of infrastructure in the stack,” stated Spark CEO Sam MacPherson. Onchain credit markets allow users and institutions to borrow, lend and deploy capital using blockchain-based assets.
Morpho has a total value locked of $6.72 billion and about $3.47 billion in active loans. Risk management platform Sentora said these figures indicate significant liquidity depth.
Sentora also pointed to Coinbase‘s use of Morpho smart contracts to originate over $2.17 billion in corporate USDC loans. This usage evidences the protocol’s role as lending infrastructure beyond a retail DeFi platform.
Exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems. Protocols are competing to become the underlying infrastructure for business-to-business integrations.
Morpho co-founder Merlin Egalite said the firm will measure the raise’s success by expanding integrations with traditional finance entities. The goal is to attract more institutional capital and roll out features from traditional credit markets.
Egalite called the round “the largest raise in DeFi history.” The funding comes as venture capital increasingly concentrates on established crypto infrastructure projects.
A Q1 2026 report by CryptoRank stated capital for Series C and later-stage rounds surged 1,020% year over year. This category accounted for 28.4% of venture funding across just nine deals.
