A French engineering student took the largest check in the history of DeFi during a bear market.

Written by: Sanqing, Foresight News

On June 9, DeFi lending protocol Morpho announced the completion of $175 million in strategic financing, with a post-money valuation reaching $2 billion. This round was co-led by Paradigm, a16z crypto, and Ribbit Capital, with over ten institutions including Apollo Funds, Circle Ventures, VanEck, Ledger, Cathay, Wintermute Ventures, HashKey, SBI Group, and the French public investment bank Bpifrance participating. The funds from this round will be used to deepen technical and business integrations with strategic partners, and to continue developing and strengthening the infrastructure required for building programmable credit products.

Morpho is the largest on-chain lending protocol besides Aave. According to DefiLlama data, its TVL peaked at $8.518 billion in October 2025, with monthly protocol fees of $24.15 million. As of the day of this financing announcement, the TVL was $6.445 billion.

Starting at $1.35 million, completing four rounds of financing in five years

$175 million, what position does this number hold in DeFi financing 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 in the 2021 bull market (post-money valuation of about $2.25 billion).

In October 2021, founder Paul Frambot was still a graduate student at École Polytechnique, Paris, and together with co-founders Merlin Egalite, Julien Thomas, and Mathis Gontier Delaunay, they launched the project with a $1.35 million seed round, led by Semantic Ventures and Nascent.

In less than a year, in July 2022, a16z and Variant co-led $18 million. At that time, Frambot had just obtained his master's degree at the age of 21, and the Morpho mainnet had only been live for a few months.

In August 2024, Ribbit Capital, with a background in traditional finance, led a $50 million strategic round, with a16z, Coinbase Ventures, Pantera, Brevan Howard, BlockTower, and over 40 other institutions participating.

This $175 million round is the fourth round, bringing the total financing amount to over $244 million.

The French engineering student initially just wanted to create an "interest rate optimization machine"

All four co-founders of Morpho come from well-known engineering schools in France and North America. Paul Frambot (founder and CEO) graduated from École Polytechnique, 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 French engineering school Télécom SudParis, long leading the core research and technical architecture of the protocol.

The team has remained highly stable since its establishment in 2021, with no public records of departures, and continues to be the core driving force behind Morpho's product iteration and technical direction.

The evolution of Morpho's product logic can be divided into three phases.

Phase One (2022): Optimizer. Early on, Morpho did not attempt to replace Aave or Compound, but instead built an "interest rate optimization layer" on top of them. By facilitating peer-to-peer matching, lenders earn a bit more while borrowers pay a bit less, with excess funds still managed by the underlying protocol. This is a Pareto improvement: it does not change risks, only improves efficiency.

Phase Two (Early 2024): Morpho Blue. Morpho launched an independent underlying lending protocol, allowing anyone to create isolated lending markets with custom parameters: collateral types, liquidation thresholds, and interest rate models can all be configured, with risk management outsourced to independent curators. Once deployed, the protocol code cannot be modified, and governance cannot intervene in launched markets. The architecture is more modular than Aave's single-pool model, making it more suitable for institutional risk isolation needs. Concurrently launched MetaMorpho Vaults allow retail users to entrust their funds to professional managers, enjoying optimized returns.

In April 2026, the rsETH of Kelp DAO faced a technical crisis, and due to Aave's pooled architecture, risks rapidly transmitted, leading to a panic exit of funds. Its TVL dropped from $26.396 billion to $14.181 billion in one month, losing over $12 billion (according to DefiLlama). Meanwhile, Morpho's isolated market design strictly limits risks within a single market, preventing any chain reactions.

Phase Three (2026): Morpho Midnight. About two weeks before the financing announcement, co-founder Merlin Egalite released the white paper for the fixed-rate lending protocol Midnight. Borrowers and lenders can pre-agree on fixed interest rates and maturity dates, with the product form resembling traditional fixed-rate bonds or time deposits. This is the credit structure most familiar to institutions.

The overlap in timing between the financing window and the Morpho Midnight product white paper is not coincidental.

Institutions have already voted with their feet

The most intriguing aspect of this round of financing is the degree of "mainstream" participation in the list of investors.

Apollo Global Management, managing over $900 billion in assets, is one of the world's largest alternative asset management firms. Not only did it participate in this round of financing, but as early as February 2026, it had already signed a cooperation agreement with Morpho, committing to purchase up to 90 million MORPHO tokens through the public market or over-the-counter transactions within 48 months, accounting for 9% of the total supply. Apollo's tokenized private credit fund, sACRED, was launched on-chain in April 2026 and included in Morpho's collateral whitelist.

Société Générale's digital asset subsidiary, SG-FORGE, will deploy euro stablecoin EURCV and USD stablecoin USDCV compliant with MiCA regulations onto Morpho in September 2025, for institutional users to borrow. This marks the first time a systemically important bank in Europe has integrated compliant stablecoins into a DeFi lending protocol.

Coinbase launched a Bitcoin collateralized loan product on the Base chain in January 2025, allowing users to convert BTC into cbBTC as collateral to borrow USDC, fully supported by the Morpho protocol. As of mid-2026, the accumulated loan volume of this product had exceeded $1 billion and continues to grow (according to The Block). Coinbase CEO Brian Armstrong has stated, "The next goal is to scale on-chain loans to $100 billion." And Morpho is the only infrastructure layer for this business line.

Institutions are not speculating on the price fluctuations of a DeFi protocol's token but are laying the groundwork for their future on-chain lending businesses. Paradigm partner Frankie candidly stated in this round of financing announcement: "In the future, every bank, asset management company, and pension fund will want to engage with the on-chain credit market. Morpho's open infrastructure is laying the foundation for global finance on-chain."

As Frambot has repeatedly emphasized, Morpho's positioning has never been to replace banks but to become the on-chain credit backend for banks and institutions. This narrative is precisely the version most easily accepted by traditional institutions in the current regulatory environment.

25-year-old Frambot and his team are turning a blockchain research project from their master's program into a real operating global credit infrastructure. From a graduate project at École Polytechnique in Paris to a foundational pipeline serving the trillion-dollar global credit market, Morpho's story continues.