Morpho Raises $175M at $2B Valuation as Paradigm and A16z Back DeFi Push

Morpho Targets Institutional Finance as TVL Hits $6.6B

Morpho has raised $175 million in fresh funding, giving the decentralized lending protocol a valuation of roughly $2 billion as it pushes deeper into institutional finance.

The round was led by Paradigm, A16z Crypto and Ribbit Capital, according to Fortune. Apollo Funds, Circle Ventures and Vaneck also participated.

The investment was made into Morpho’s cryptocurrency, with pricing based on the token’s average monthly value. The final cost for investors depended on when they joined the round, Morpho co-founder Paul Frambot told Fortune.

Morpho is one of the fastest-growing players in decentralized finance. The protocol allows users to create lending and borrowing markets on blockchain networks. Unlike traditional lenders, where one institution controls credit decisions, DeFi lending relies on smart contracts and open market participation.

The protocol currently has about $6.6 billion in total value locked (TVL). Its users include major crypto firms such as Coinbase, Kraken, Anchorage Digital, and Galaxy Digital.

Morpho TVL. Source: Defillama

Morpho is still smaller than Aave, the dominant DeFi lending platform, which has about $12.5 billion locked in its protocol. Morpho has been narrowing the gap, particularly as institutions search for more flexible onchain lending infrastructure.

Frambot founded Morpho with fellow French co-founders Merlin Egalite, Julien Thomas, and Mathis Gontier Delaunay. The team first built lending tools on top of Aave before shifting toward a broader model that lets users create customized lending markets with their own risk settings.

That design has helped Morpho stand out. Rather than offering one centralized pool of lending rules, the protocol gives developers and institutions the ability to build markets tailored to specific assets, risk profiles, and borrowers.

The raise also comes at a time when crypto and traditional finance are moving closer together. Blackrock has multiple digital asset ETFs. The New York Stock Exchange’s parent company has invested in crypto exchange OKX. Banks are also exploring tokenized deposits and blockchain-based settlement.

Frambot said he sees traditional institutions moving toward DeFi as they look for higher yields and programmable financial infrastructure. He described himself as a builder rather than a finance insider.

Morpho has not been free of risk. The protocol had limited exposure to the KelpDAO exploit that also affected Aave and other crypto projects. Still, the latest funding round shows investors remain confident in its long-term position.

For Morpho, the next test is whether it can turn DeFi lending from a crypto-native tool into infrastructure that Wall Street can use at scale.