Investors are increasingly backing stablecoin and credit infrastructure over decentralized finance lending (DeFi) alone, with Morpho Labs’ latest funding round drawing attention to onchain credit markets, according to Spark CEO Sam MacPherson.
Morpho announced on Tuesday that it has raised $175 million in a round led by Paradigm, a16z crypto and Ribbit Capital. While Morpho is commonly known as a DeFi lending protocol, the company said 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 that the sector will grow alongside stablecoins and other tokenized financial products.
As stablecoins grow in size, “credit becomes one of the most important pieces of infrastructure in the stack,” MacPherson told Cointelegraph.
Morpho’s growing role as credit infrastructure
According to data from DeFiLlama, Morpho has a total value (TVL) of $6.72 billion and approximately $3.47 billion in active loans. Risk management platform Sentora said in a Friday newsletter that the figures indicate “significant liquidity depth.”
The total value of Morpho’s locked and active loans has risen sharply since the end of 2024. Source: DeFiLlama
Sentora also pointed to Coinbase’s use of Morpho smart contracts to provide more than $2.17 billion in corporate USDC loans as evidence that the protocol is being used as a credit infrastructure rather than solely as a retail DeFi platform.
Sentora argued that the trend extends beyond crypto-native lending. The company said exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems to enable credit products, as protocols compete to become the underlying infrastructure for business-to-business integrations.
Capital flows to late-stage crypto companies
Morpho plans to measure the success of the raise over the next 12 to 18 months by expanding integrations with banks, asset managers and major platforms, raising more institutional capital and rolling out features of traditional credit markets to drive adoption, co-founder Merlin Egalite told Cointelegraph.
“The problem we’re trying to solve is less about replacing competitors and more about positioning ourselves as the credit infrastructure layer that banks, asset managers and fintechs build on,” he said.
Morpho’s gain is the “largest” in DeFi history. Source: Merlijn Egalite
The financing round, that Egalite called “the biggest surge in DeFi history” comes as venture capital increasingly focuses on a small group of established crypto infrastructure projects.
According to a Q1 2026 report According to CryptoRank, capital allocated to Series C and later-stage crypto funding rounds increased 1,020% year over year and 320% quarter over quarter. The category accounted for 28.4% of venture funding in just nine deals, while seed and pre-seed funding fell by 38.1% and represented just 5.2% of total capital.
Egalite said he is not concerned about capital concentration.
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