Morpho raises $175M at $2B to expand into institutions

Morpho raised $175 million in a funding round led by Paradigm, A16z Crypto and Ribbit Capital at a valuation of about $2 billion, the company announced June 10. The firm says it will use the capital to expand its decentralized lending platform into institutional finance and to pursue banks, asset managers and large crypto firms.

The round included participation from Apollo Funds, Circle Ventures and VanEck. The investment was made into Morpho’s native token, with pricing tied to the token’s average monthly value; the final price for each investor varied by entry date, co-founder Paul Frambot confirmed. Morpho plans to allocate funds to product development and compliance capabilities intended for institutional counterparties.

The protocol reports about $6.6 billion in total value locked, a measure of assets supplied to its lending markets. Major users include Coinbase, Kraken, Anchorage Digital and Galaxy Digital. By comparison, the largest pure-play DeFi lender has around $12.5 billion locked.

Morpho was founded by Paul Frambot with Merlin Egalite, Julien Thomas and Mathis Gontier Delaunay. The team initially built on another protocol’s infrastructure before moving to a model that lets developers and institutions create lending and borrowing markets with separate risk parameters enforced by smart contracts.

The company says it will focus on compliance, custody and settlement integrations and on scaling its market architecture to meet institutional requirements. Frambot described himself as a builder rather than a traditional finance executive and expects more established financial firms to use decentralized finance for higher yields and programmable financial infrastructure.

Morpho reported limited exposure to an exploit that affected several DeFi projects. The team lists security and risk management as ongoing priorities as it engages larger counterparties and higher volumes.

To onboard larger institutional clients, Morpho will need to demonstrate operational controls, compliance workflows, custody and settlement integrations and the ability to support customized credit markets for substantial counterparties.