Gelato and Morpho Partner to Offer Embedded Crypto-Backed Loans

Gelato, a web3 developer cloud platform, and Morpho, a decentralized lending protocol, have announced a partnership to offer embedded crypto-backed loans. This collaboration aims to provide wallets, brokers, and fintech apps with the ability to integrate non-custodial, Web2-like stablecoin loans directly into their platforms. The new service allows users to borrow stablecoins, such as USDC, using their crypto assets as collateral, with a seamless and secure borrowing experience.

The partnership leverages Gelato’s Smart Wallet SDK and Morpho’s permissionless lending markets to create a complete borrowing flow that can be integrated into platforms within days. The loans are fully non-custodial and onchain, governed by smart contracts, and users can initiate loans through an onchain bank account powered by embedded wallet infrastructure. This includes features like 7702-powered smart accounts, gasless transactions, and the ability to execute multiple transactions in a single click.

Morpho, which recently partnered with a major cryptocurrency exchange to enable similar BTC-backed loans, brings a proven lending infrastructure with over $6.5 billion in total value locked. Gelato’s Smart Wallet SDK, used by companies such as Safe, Infinex, and Gnosis Pay, handles account abstraction, one-click onboarding, and gas sponsorship, enabling applications to deliver modern, web2-style user experiences.

“We’re excited to see more platforms bring crypto-backed loans to users in a self-custodial way,” said Paul Frambot, CEO of Morpho Labs. “Morpho is built to be integrated, and Gelato makes it easy to deliver a seamless UX on top.”

Embedded Crypto-Backed Loans are designed to meet the needs of both consumer and institutional users, offering a simple, intuitive interface while preserving the non-custodial guarantees that users and platforms increasingly expect. Key features include the ability to borrow USDC in one click using crypto assets like BTC as collateral, fully non-custodial and onchain transactions, no credit checks required, one-click wallet creation via email, social login, or passkeys, EIP-7702 powered Smart Wallet Account, embedded UX with full brand control, and gasless transactions across over 50 EVM chains.

Later this year, Gelato plans to introduce new security and recovery features to extend the smart wallet stack. These include passkey authentication, multi-signer two-factor approvals using regulated custodians, and onchain recovery modules tied to email or social logins. All upgrades are implemented at the smart contract level to maintain full decentralization.

A full demo of the product is available, showcasing the end-to-end borrowing experience from wallet creation to BTC collateralization and loan issuance. Embedded Crypto-Backed Loans are now available in beta on Polygon, Arbitrum, Optimism, and Scroll, with support for Katana coming soon. Gelato and Morpho are working closely with additional chain teams to expand deployment in the months ahead.

Morpho is a decentralized lending protocol powering open, onchain money markets. It enables pooled and peer-to-peer borrowing with programmable risk parameters and oracle-based pricing. With over $6.5 billion in total value locked, Morpho is one of the most widely adopted lending platforms in Ethereum.

Gelato is Web3's Developer Cloud, providing enterprises with critical infrastructure to build web2-like non-custodial applications at scale. It offers developer tooling for smart wallets, gas abstraction, and deploying enterprise-grade rollups. Gelato is used by leading apps, wallets, and protocols across the EVM ecosystem to deliver seamless, secure, and fully onchain user flows.