Morpho Raises $175M to Expand DeFi Lending for Banks

Morpho, a Paris-based decentralized lending protocol, announced a $175 million funding round on Tuesday. The round was co-led by Paradigm, Andreessen Horowitz and Ribbit Capital, with strategic participation from Apollo Funds, Circle Ventures and VanEck and more than a dozen other investors. Morpho plans to use the funds to build infrastructure and pursue commercial integrations with strategic partners.

The protocol manages about $11 billion in user deposits and previously raised roughly $68 million across two earlier rounds. Morpho allows anyone to create isolated lending markets and has popularized curated lending vaults, pooled products that let designated risk managers set rules for how deposits are allocated across crypto-backed markets.

Exchanges including Coinbase and Binance use Morpho to offer interest on stablecoins such as USDC and USDT and to provide loans backed by Bitcoin and Ethereum. French bank Société Générale is building products on Morpho’s network. Coinbase was an early backer and used the protocol to relaunch a Bitcoin-backed lending program.

The funding comes as decentralized finance has experienced several large exploits this year, including a liquidity crisis on Aave after an exploit involving KelpDAO and a suspected $285 million theft from the Drift protocol attributed to a North Korean-linked group. Morpho acknowledged those sector challenges while noting continued demand for open credit infrastructure.

On Morpho and similar platforms, loans are liquidated when borrower collateral falls below required thresholds, allowing third parties to buy distressed positions. Platforms that route customers into third-party lending have seen increased liquidation activity during recent market volatility; on-chain analytics recorded about 2,900 Coinbase customer liquidations in one week as Bitcoin fell to a 19-month low.

Morpho co-founder Paul Frambot described the goal as ‘building the open credit network for the world, connecting those with excess capital to those who need financing, globally.’ The company expects the financing to fund additional product work and partnerships as it expands commercial integrations with banks, exchanges and institutional asset managers.