Spark CEO Sam McPherson said Morpho Labs’ latest funding round puts the on-chain credit market in the spotlight as investors increasingly support stablecoins and credit infrastructure, as well as decentralized finance (DeFi) lending.
Morpho announced Tuesday that it has raised $175 million in a round led by Paradigm, a16z crypto, and Ribbit Capital. Morpho is widely known as a DeFi lending protocol, but the company said it aims to become a credit infrastructure layer for banks, asset managers, and fintechs.
On-chain credit markets allow users and institutions to borrow, lend, and deploy capital using blockchain-based assets. Investors are betting the sector will grow alongside stablecoins and other tokenized financial products.
As stablecoins expand, “credit becomes one of the most important pieces of infrastructure in the stack,” McPherson told Cointelegraph.
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Morpho’s role as a financing infrastructure expands
According to DeFiLlama data, Morpho has a total value locked (TVL) of $6.72 billion and active loan balances of approximately $3.47 billion. Risk management platform Centra said in a newsletter on Friday that the numbers indicate “considerable depth of liquidity.”
Morpho’s total fixed and active loans have been increasing rapidly since late 2024. Source: DeFiLlama
Sentora also pointed out that Coinbase has originated over $2.17 billion in corporate USDC loans using Morpho smart contracts, evidence that the protocol is being used not only as a retail DeFi platform but also as a lending infrastructure.
Centra argued that this trend extends beyond crypto-native lending. The company said that while exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems to enhance their credit products, protocols are competing to become the underlying infrastructure for business-to-business integration.
Capital flows into late-stage crypto companies
Morpho intends to measure its fundraising success over the next 12 to 18 months by expanding integrations with banks, asset managers, and large platforms, bringing in more institutional investors, and rolling out capabilities from traditional credit markets to drive adoption, co-founder Marlin Egarite told Cointelegraph.
“The problem we’re solving is less about displacing our competitors and more about establishing ourselves as a credit infrastructure layer for banks, asset managers and fintechs to build on,” he said.
Morpho’s funding is the “largest” in DeFi history. Source: Merlin Egarite
Funding round conducted by Egalite called The “largest funding in DeFi history” comes as venture capital increasingly focuses on a small number of established crypto infrastructure projects.
According to the first quarter of 2026 report According to CryptoRank, capital allocated to Series C and late-stage crypto funding rounds surged 1,020% year-over-year and 320% quarter-over-quarter. This category accounted for 28.4% of venture funding with just nine deals, while seed and pre-seed funding decreased by 38.1% to just 5.2% of total capital.
Egarite said he was not concerned about capital concentration.
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