Gelato and Morpho Launch Embedded Crypto-Backed Loans with 100% Non-Custodial System

Gelato and Morpho have collaborated to introduce Embedded Crypto-Backed Loans, a groundbreaking solution that integrates directly into wallets, brokerages, and fintech platforms. This partnership aims to revolutionize crypto borrowing by offering a seamless, non-custodial borrowing system. Gelato contributes its Smart Wallet SDK, while Morpho provides its decentralized lending infrastructure, resulting in a fully white-labeled, non-custodial system. Users can access stablecoins like USDC by using their crypto assets, such as BTC, as collateral without relinquishing control of their funds.
The new offering is designed for effortless onboarding, allowing users to access loans through built-in wallet interfaces with sign-in options including email, social logins, or passkey authentication. This user experience mirrors the smoothness of modern banking apps while remaining fully decentralized. Paul Frambot, the CEO of Morpho Labs, expressed enthusiasm about the collaboration, highlighting the ease of integration and seamless user experience facilitated by Gelato.
The embedded crypto loan solution offers several key features, including the ability to instantly borrow USDC using BTC and other crypto assets as collateral through a 100% non-custodial and fully on-chain process. There are no credit checks or KYC hurdles, making the experience smooth and accessible. Smart Wallets powered by EIP-7702 ensure secure, streamlined interactions, while one-click wallet creation and loan execution simplify onboarding. Transactions are completely gasless and supported across more than 50 EVM-compatible chains. Developers benefit from full brand control and a fully embedded user experience, allowing both Web3-native and traditional platforms to easily integrate crypto lending solutions and get up and running in days, not weeks.
Morpho brings its recent partnership with Coinbase to enable BTC-backed loans, along with its $6.5 billion TVL and battle-tested lending protocol. Gelato provides mission-critical infrastructure that powers top-tier platforms, reshaping how applications offer financial services and bringing decentralized finance to the fingertips of millions without sacrificing control or transparency. The solution is tailored for both institutional-grade use cases and retail adoption, offering a single-click, Web2-like flow for end users and a compliant, programmable infrastructure for platforms.
Looking ahead, Gelato plans to upgrade its offering with several new features to enhance user security and control. These enhancements include multi-signer two-factor authentication, passkey-based login for added protection, and on-chain recovery options linked to email or social accounts. These improvements will be implemented directly at the smart contract level, ensuring that full decentralization is maintained. The goal is to strengthen user safety without sacrificing autonomy, staying true to the trustless, transparent principles at the heart of Web3.
Morpho’s platform offers a live demo showcasing the entire borrowing process, from setting up a wallet to using BTC as collateral. Beta access is already live on Polygon, Arbitrum, Optimism, and Scroll, with Katana support and more chain integrations on the horizon. Morpho is a decentralized, open-source lending platform that enables peer-to-peer and pooled crypto lending, featuring customizable risk settings and Oracle-based pricing. Gelato is the go-to cloud platform for Web3 developers, offering smart wallets, gas abstraction, and enterprise-grade rollups to help developers build apps that feel like Web2 while remaining fully non-custodial and on-chain.

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