Inside Morpho, the "Onchain Credit Network" Backed by SBI—How Separating Lending Infrastructure from Strategy Created a New Financial Backbone

What Is Morpho? Infrastructure That Lets Anyone Create a Lending Market

Morpho is a blockchain-based lending and borrowing protocol founded in 2021 by Paul Frambot and three co-founders in France. Rather than a single institution underwriting loans like a bank, it runs collateralized lending markets automatically through code. Its defining feature is a departure from the "one big shared pool" model used by predecessors like Aave and Compound: Morpho isolates each lending market. Anyone can permissionlessly create a dedicated market by specifying the collateral asset, loan asset, loan-to-value ratio, and price oracle. The base contract, "Morpho Blue," is written in roughly 650 lines of immutable code, so problems in one market are structurally contained from spilling into others.

The Two-Layer Design: Foundation (Blue) and Strategy (Vaults)

Because choosing individual markets is difficult for ordinary users, a "Vault" layer sits on top. Users simply deposit assets such as USDC, and third-party risk specialists called "curators" (e.g., Gauntlet, Steakhouse Financial) automatically allocate funds across multiple markets to optimize yield. Curators resemble asset management firms with one decisive difference: they never take custody of client funds. They control only the allocation logic; deposit and withdrawal rights always remain with the user. In short, Morpho separated lending infrastructure from lending strategy—keeping the infrastructure open to all while letting multiple professional strategists compete on top.

The Business Model: The Protocol Itself Is "Free"—Curators Earn the Fees

Remarkably, the Morpho protocol currently charges nothing. Interest paid by borrowers flows to lenders, and curators take performance fees (capped at 50% of yield, typically a few percent to 15%) and, under Vaults V2, management fees of up to 5%. Although protocol-generated fees exceed $250 million cumulatively, a built-in "fee switch" allowing up to 25% of borrower interest remains deliberately off, prioritizing reinvestment in growth. Organizationally, developer Morpho Labs became a subsidiary of the Morpho Association, a French nonprofit, in 2025, and the MORPHO token is dedicated to governance. Notably, the $175 million round was structured as token purchases at average monthly market prices—an unusual arrangement signaling investor conviction.

Real Adoption and the Numbers: The Invisible Infrastructure Behind Coinbase

Morpho's strength lies in production use. Coinbase's bitcoin-backed USDC loans run on Morpho, originating a cumulative $2.17 billion by April 2026 and expanding to the UK. Kraken, Anchorage Digital, Galaxy Digital, and an institutional vault for US asset management giant Apollo are also live. Total deposits stand at roughly $11–13 billion, active loans at about $4.5 billion, and annualized fees at approximately $192 million (DefiLlama, early June 2026). SBI Chairman Yoshitaka Kitao framed the investment around "establishing an efficient, transparent onchain credit market," positioning Morpho alongside the trust-type yen stablecoin JPYSC and the Ondo tokenization partnership as one pillar of SBI's onchain finance strategy.

[Business Development Insights]

1. The "B2B backend" strategy is the key to institutional adoption: Morpho grew not as a consumer brand but as the lending engine behind established players like Coinbase. For Japanese financial institutions and fintechs, embedding DeFi behind their own UI in a white-label fashion is the realistic entry path that balances regulatory compliance with customer ownership.
2. The rise of the "curator" as a new profession: Separating infrastructure from strategy created a business category that earns fees through allocation expertise without custody. The top five curators hold roughly 43% of the segment, each managing $1.3–1.9 billion. Japanese asset managers and trust banks have meaningful room to enter this space with "Japan-grade risk management" as a differentiator.
3. Connecting JPYSC is the litmus test for domestic use cases: SBI is advancing its yen stablecoin JPYSC in parallel with the Morpho investment, and an onchain lending market where yen-denominated assets serve as collateral for JPYSC borrowing is a natural extension. Firms that front-run the legal analysis (Money Lending Business Act, Payment Services Act) will hold the advantage.

[Sources]

• SBI Holdings, "Announcement Regarding Participation in Morpho's Fundraising" (June 10, 2026) https://www.sbigroup.co.jp/news/2026/0610_16390.html
• Fortune, "Morpho raises $175 million in a round led by a16z crypto, Paradigm, and Ribbit Capital" https://fortune.com/2026/06/09/morpho-fundraise-a16z-crypto-paradigm-ribbit-capital-175-million/
• Unchained, "Morpho Raises $175 Million Co-Led by Paradigm, a16z Crypto, and Ribbit Capital" https://unchainedcrypto.com/morpho-raises-175-million-co-led-by-paradigm-a16z-crypto-and-ribbit-capital-to-build-open-credit-network/
• Morpho Docs (governance and fee structure) https://docs.morpho.org/learn/governance/organization/ / https://docs.morpho.org/curate/concepts/fee/
• Morpho Blog, "Curators Explained" https://morpho.org/blog/curators-explained/
• Lex (Fintech Blueprint), "DeFi: Why Coinbase and Apollo Are Building on $2B Morpho" https://lex.substack.com/p/defi-the-175mm-bet-on-morpho
• The Token Dispatch, "Morpho Is Becoming the Backend" https://www.thetokendispatch.com/p/morpho-is-becoming-the-backend
• NADA NEWS (Yahoo! News Japan), "SBI Participates in Morpho's ~JPY 28B Raise, One of DeFi's Largest" https://news.yahoo.co.jp/articles/874ed58ccc1354e681c72cb11bb3a6ead0122edc