Morpho raises $175M to expand onchain credit infrastructure

Morpho Labs raised $175 million in a funding round led by Paradigm, a16z Crypto and Ribbit Capital, the firm announced Tuesday. Morpho plans to use the capital to expand onchain credit services and add features used in traditional credit markets for banks, asset managers and fintechs.

The protocol reports $6.72 billion in total value locked and $3.47 billion in active loans, based on DeFiLlama and Sentora data. Sentora described those figures as indicating significant liquidity depth and noted the protocol’s TVL and active loans have climbed since late 2024.

Sentora highlighted institutional activity on the platform, noting an institutional counterparty used Morpho smart contracts to originate more than $2.17 billion in corporate USDC loans. Morpho plans to measure success over the next 12 to 18 months by expanding integrations with banks, asset managers and large platforms, drawing more institutional capital and rolling out credit-market features.

Investors leading the round said they expect demand for stablecoin and credit infrastructure alongside tokenized financial products. Spark CEO Sam MacPherson said investors are increasingly backing stablecoin and credit infrastructure rather than retail-focused lending, and added that “credit becomes one of the most important pieces of infrastructure in the stack.”

Co-founder Merlin Egalite called the raise “the largest raise in DeFi history” and said the firm aims to be the credit infrastructure layer for banks, asset managers and fintechs. Egalite said the company is focused on building tools for institutional adoption and is not focused on replacing competitors.

A Q1 2026 industry report showed capital allocated to Series C and later-stage crypto funding rose roughly 1,020% year-over-year and 320% quarter-over-quarter, accounting for 28.4% of venture funding across nine deals. The report showed seed and pre-seed allocations fell about 38.1% and represented 5.2% of total capital.

Exchanges, custodians and asset managers are evaluating blockchain-based lending systems to support credit products, according to market observers. Morpho said it will add integrations and credit-market features intended to support business-to-business lending and attract institutional participants.