Investors are increasingly backing stablecoin and credit infrastructure rather than decentralized finance (DeFi) lending alone, with Morpho Labs’ latest funding round drawing attention to onchain credit markets, according to Spark CEO Sam MacPherson.
Morpho announced Tuesday that it raised $175 million in a round led by Paradigm, a16z crypto and Ribbit Capital. While Morpho is widely known as a DeFi lending protocol, the company said that it aims to become a credit infrastructure layer for banks, asset managers and fintechs.
Onchain 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 scale, “credit becomes one of the most important pieces of infrastructure in the stack,” MacPherson told Cointelegraph.
Related: DeFi protocol Radiant to wind down after failing to recover from 2024 hack
Morpho’s growing role as lending infrastructure
Morpho has a total value locked (TVL) of $6.72 billion and about $3.47 billion in active loans, according to DeFiLlama data. Risk management platform Sentora said in a Friday newsletter that the figures indicate “significant liquidity depth.”
Morpho’s total value locked and active loans have climbed sharply since late 2024.Source: DeFiLlama
Sentora also pointed to Coinbase’s use of Morpho smart contracts to originate more than $2.17 billion in corporate USDC loans as evidence that the protocol is being used as lending infrastructure rather than solely as a retail DeFi platform.
Sentora argued that the trend extends beyond crypto-native lending. The firm said exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems to power credit products, while protocols compete to become the underlying infrastructure for business-to-business integrations.
Capital flows to late-stage crypto firms
Morpho intends to measure the success of the raise over the next 12 to 18 months by expanding integrations with banks, asset managers and large platforms, attracting more institutional capital and rolling out features from traditional credit markets to drive adoption, co-founder Merlin Egalite told Cointelegraph.
“The problem we are trying to solve is less about replacing competitors and more about establishing ourselves as the credit infrastructure layer that banks, asset managers and fintechs build on,” he said.
Morpho’s raise “largest” in DeFi history. Source: Merlin Egalite
The funding round, which Egalite called “the largest raise in DeFi history,” comes as venture capital increasingly concentrates on a small group of established crypto infrastructure projects.
According to a Q1 2026 report by CryptoRank, capital allocated to Series C and later-stage crypto funding rounds surged 1,020% year over year and 320% quarter over quarter. The category accounted for 28.4% of venture funding across just nine deals, while seed and pre-seed funding fell 38.1% and represented only 5.2% of total capital.
Egalite said that he is unconcerned about capital concentration.
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