Investors are increasingly backing stablecoins and lending infrastructure rather than decentralized lending (DeFi) itself, and Morpho Labs’ latest round of funding has put a spotlight on onchain credit markets, according to Spark CEO Sam MacPherson.
Morpho announced on Tuesday that it 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 has stated that its goal is to become a lending infrastructure layer for banks, asset managers and fintechs.
Onchain credit markets enable users and institutions to lend, borrow and deploy capital using blockchain-based assets. Investors are betting that this sector will grow alongside stablecoins and other tokenized financial products.
As stablecoins scale up, “credit becomes one of the most important pieces of infrastructure in the stack,” MacPherson told Cointelegraph.
Related: DeFi protocol Radiant will cease operations after failing to recover from hack in 2024
Morpho’s growing role as a lending infrastructure
Morpho has a total secured value (TVL) of $6.72 billion and approximately $3.47 billion in busy loans, according to DeFiLlama data. Risk management platform Sentora said in a bulletin on Friday that the numbers showed “significant depth of liquidity.”
The total value of Morpho’s locked and busy credits has increased dramatically since the end of 2024. Source: DeFiLlama
Sentora also highlighted Coinbase’s employ of Morpho shrewd contracts to originate over $2.17 billion in USDC corporate loans, providing evidence that the protocol is being used as a lending infrastructure and not solely as a retail DeFi platform.
Sentora argued that this trend goes beyond cryptocurrency lending. The company said exchanges, custodians and asset managers are actively evaluating blockchain-based lending systems to power lending products as the protocols compete to become the primary infrastructure for enterprise-to-business integration.
Capital is flowing into late-stage crypto companies
Morpho intends to measure the success of the raise over the next 12 to 18 months by expanding integrations with banks, asset managers and gigantic platforms, attracting more institutional capital and implementing features from classic lending 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 lending infrastructure layer on which banks, asset managers and fintechs rely,” he said.
Morpho raise ‘biggest’ in DeFi history. Source: Merlin Egalite
The funding round that Egalite called The “biggest surge in DeFi history” comes as venture capital increasingly focuses on a tiny group of established crypto infrastructure projects.
According to the report for the first quarter of 2026 report According to CryptoRank, capital allocated to Series C and later-stage cryptocurrency financing rounds increased by 1,020% year-over-year and 320% quarter-over-quarter. This category accounted for 28.4% of venture funding in just nine deals, while seed and pre-seed funding declined by 38.1% and represented only 5.2% of total capital.
Egalite said it was not concerned about capital concentration.
Asia Express: North Korea denies cryptocurrency hacks, Upbit bank tests Ripple
