Morpho closed a $175 million raise on June 9, backed by a who’s who of crypto and traditional finance: Paradigm, a16z crypto, Ribbit Capital, VanEck, Apollo Global Management, and Circle Ventures. The deal signals that deep-pocketed investors see DeFi lending infrastructure as a bet worth making, even as the sector reels from a string of exploits that have drained hundreds of millions this year.
The $175M Raise and Its Backers
The round — one of the largest in DeFi this year — gives Morpho firepower to expand its lending protocol, which already powers products from Coinbase and Kraken. Apollo, a $500 billion asset manager, and VanEck, a major ETF issuer, joining the cap table suggests the line between traditional finance and on-chain credit is blurring fast.
KelpDAO: A $290M Warning
But the same composability that makes Morpho attractive also creates risk. According to TRM Labs, the Drift and KelpDAO exploits accounted for roughly 76% of 2026's crypto hack losses through April. The KelpDAO exploit alone was estimated at around $290 million, using unbacked rsETH as collateral across Aave, Compound, and Euler. That left roughly $200 million in bad debt on Aave alone — a cascading failure where a problem in one protocol infected others with no direct exposure.
Coinbase and Kraken Plug In
Despite those scars, major exchanges are leaning into DeFi lending. Coinbase operates a USDC lending product powered by Morpho and Steakhouse vaults on Base. It has originated over $1.2 billion in USDC loans, with more than $800 million active and over $1.4 billion in cbBTC as collateral. Kraken runs a parallel DeFi Earn product that routes assets through vaults and lending protocols via infrastructure built by Veda and Sentora — no seed phrases or manual contract signatures required for users.
Matt Fisher: Distribution Is the Moat
Matt Fisher, CEO of Katana, said the industry is moving past speculation. “Crypto is moving into utility now. Distribution is a real moat in branding and trust,” he told GFdaily. Fisher predicted market consolidation toward a power law, with a handful of protocols absorbing most volume and trust. But he warned that composability can cause cascading failures — and that ordinary users don’t want to understand risk curators, bridge assumptions, oracle feeds, or liquidation thresholds. “They want the card to work,” he said.
The question hanging over Morpho’s raise is whether the infrastructure can scale without triggering another KelpDAO. The backers are betting yes. The market will find out the hard way if they’re wrong.
