On June 9th, the DeFi lending protocol Morpho announced the completion of a $175 million strategic financing round, with a post-money valuation of $2 billion.
This round was jointly led by Paradigm, a16z crypto, and Ribbit Capital, with participation from Apollo Funds, Circle Ventures, VanEck, Ledger, Cathay, Wintermute Ventures, HashKey, SBI Group, and over ten other institutions.
The funds from this round will be used to deepen technical and business integration with strategic partners, further develop and strengthen the infrastructure needed to build enterprise-grade programmable credit products.
Morpho is the second-largest on-chain lending protocol after Aave. According to DefiLlama data, its TVL peaked at $8.518 billion in October 2025, with a monthly protocol fee of $24.15 million. As of the announcement of this financing round, the TVL stands at $6.445 billion.
Starting from $1.35 Million, Completing Four Rounds of Financing in Five Years
At $175 million, where does this figure rank in DeFi fundraising history? According to CryptoRank data, it has surpassed Uniswap's $165 million in 2022 and is tied for first place with 1inch's $175 million Series B financing completed during the 2021 bull market (with a post-money valuation of approximately $22.5 billion).
In October 2021, founder Paul Frambot was still a graduate student at the Paris Polytechnic University when he, along with co-founders Merlin Egalite, Julien Thomas, and Mathis Gontier Delaunay, launched the project with a $1.35 million seed round, led by Semantic Ventures and Nascent.
In less than a year, by July 2022, a16z and Variant jointly led a $18 million round. At that time, Frambot had just obtained his master's degree, at the young age of 21, and the Morpho mainnet had only been launched for a few months.
In August 2024, Ribbit Capital, with a traditional finance background, led a $50 million Series B funding round, with participation from a16z, Coinbase Ventures, Pantera, Brevan Howard, BlockTower, and over 40 other institutions.
This $175 million funding round marks the fourth round, bringing the total funding to over $244 million.
French Engineering Students Initially Set Out to Build an “Interest Rate Optimization Machine”
The four co-founders of Morpho all hail from renowned engineering schools in France and North America. Paul Frambot (Founder and CEO) graduated from Institut Polytechnique de Paris, majoring in parallel and distributed systems; Merlin Egalite (Co-founder) graduated from CentraleSupélec, focusing on computer science and artificial intelligence.
Julien Thomas (Co-founder and Chief Engineer) holds a master's degree from Polytechnique Montréal; Mathis Gontier Delaunay (Co-founder and Head of Research) graduated from the top engineering school Télécom SudParis in France, leading long-term core research on protocols and technical architecture.
Since its founding in 2021, the team has remained highly stable, with no publicly known departures, and continues to be the core driving force behind Morpho's product iterations and technical direction.
The evolution of the Morpho product logic can be divided into three stages.
Stage One (2022): Optimizer. In the early days, Morpho did not attempt to replace Aave or Compound but instead built an “interest rate optimization layer” on top of them.
Through peer-to-peer matching, the lending party earns a little more, and the borrowing party pays a little less, with excess funds still custodied in the underlying protocol. This is a Pareto improvement: no change in risk, only efficiency enhancement.
Stage Two (Early 2024): Morpho Blue. Morpho introduced an independent underlying lending protocol where anyone can create a customized isolated lending market: collateral types, liquidation thresholds, and interest rate models are all configurable, with risk management outsourced to independent curators.
The protocol code is immutable once deployed, and governance cannot intervene in live markets. The architecture is more modular than Aave's single pool model, making it more suitable for institutional-level risk isolation needs. The simultaneously launched MetaMorpho Vaults allow retail users to delegate their funds to professional managers for custody, enjoying optimized yields.
In April 2026, a technical crisis hit Kelp DAO's rsETH, and due to Aave's adoption of a pooled architecture, the risk propagated rapidly, leading to a fund panic. Its TVL plummeted from $263.96 billion to $141.81 billion in a single month, with a loss of over $12 billion (according to DefiLlama). In contrast, Morpho's isolated market design strictly limits risk within a single market, preventing a cascading effect.
Phase Three (2026): Morpho Midnight. About two weeks before the funding announcement, co-founder Merlin Egalite released the whitepaper for the fixed-rate lending protocol Midnight. Borrowers and lenders can pre-agree on a fixed interest rate and maturity date, with the product resembling traditional fixed-rate bonds or term loans. This mirrors the credit structure most familiar to institutions.
The fundraising window and the Morpho Midnight product whitepaper overlap significantly in timing, which is not a coincidence.
Institutions Voting with Their Feet
The most intriguing aspect of this funding round is the extent of institutional "outing" on the investor list.
Apollo Global Management manages over $900 billion in assets and is one of the world's largest alternative asset management firms. Not only did it participate in this funding round, but it had already signed a partnership agreement with Morpho in February 2026, committing to acquire up to 90 million MORPHO tokens through open-market or over-the-counter transactions within 48 months, representing 9% of the total supply.
Apollo's tokenized private credit fund sACRED was deployed on-chain in April 2026 and was included in Morpho's collateral whitelist.
SG-FORGE, the digital asset subsidiary of Societe Generale's French bank, deployed the MiCA-compliant Euro stablecoin EURCV and the US Dollar stablecoin USDCV to Morpho in September 2025 for institutional user borrowing. This marks the first time a European systemically important bank has integrated compliant stablecoins into a DeFi lending protocol.
Coinbase, which launched a Bitcoin-backed loan product on the Base Chain in January 2025, allows users to collateralize BTC and borrow USDC directly, powered by the Morpho protocol. By mid-2026, the product's cumulative lending volume has surpassed $1 billion and continues to grow (according to The Block).
Coinbase CEO Brian Armstrong has stated, "The next milestone is to scale on-chain lending to $100 billion." Morpho is the sole infrastructure layer for this business line.
Institutions are not speculating on the price of a DeFi protocol's token but are laying the groundwork for their future on-chain lending business. Paradigm partner Frankie stated in this funding round announcement, "Every bank, asset management firm, and pension fund will want to tap into the on-chain credit market in the future, and Morpho's open infrastructure is laying the foundation for global finance to go on-chain."
As Frambot has repeatedly emphasized, Morpho's positioning has never been to replace banks but to become the on-chain lending backend for banks and institutions. This narrative happens to be the most easily accepted version by traditional institutions in the current regulatory environment.
At 25, Frambot and his team are turning a blockchain research project from their master's program into a fully operational global credit infrastructure. From a postgraduate program at École Polytechnique in Paris to an underlying pipeline serving the global trillion-dollar credit market, Morpho's story is still unfolding.
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