Decentralized lending protocol Morpho has closed a $175 million funding round at a valuation of up to $2 billion, cementing its position as the second-largest player in DeFi lending behind Aave. The round was led by Paradigm, Ribbit Capital, and a16z crypto, with additional participation from Apollo Funds, Circle's venture arm, and VanEck. Morpho now holds roughly $6.6 billion in total value locked across Ethereum, HyperEVM, and other blockchains.
How the raise worked
The investment was structured in cryptocurrency, priced at the token's average monthly price — a structure that lets the protocol avoid the discount drama that sometimes dogs token sales. Morpho last raised at a seed stage four years ago, when founder Paul Frambot was 20. He's now 25. The company was co-founded by three other French engineers: Merlin Egalite, Julien Thomas, and Mathis Gontier Delaunay.
Morpho lets users create custom blockchain-based lending markets with adjustable risk parameters — a more modular approach than Aave's pooled model. Aave still leads with ~$12.5 billion locked, but it took a hit in April 2026 when it had significant exposure to a $290 million hack of other protocols, according to Fortune. That event left some institutional lenders looking for alternatives, and Morpho has been picking up that business. Its existing institutional users include Coinbase, Kraken, Anchorage Digital, and Galaxy Digital.
What the a16z partner said
Guy Wuollet, general partner at a16z crypto, said the round reflects a growing convergence between traditional finance and DeFi. The firm has been doubling down on on-chain capital markets, and Morpho's modular design fits that thesis.
Frambot's line
Co-founder Paul Frambot is known for his blunt takes. At the announcement, he said: 'I think TradFi is going to have to wear shorts.' A few weeks earlier, he attended an event at the New York Stock Exchange — and wore trousers, which he pointed out with a dry aside. The contrast captures the tension the company is trying to exploit: bring Wall Street onto blockchains without letting it dictate the rules.
Morpho hasn't said whether it will pursue another raise or push for an equity listing. For now, the $175 million gives it runway to expand into more blockchains and court the institutional lenders who are still wary of DeFi after the April hacks.
