Gelato and Morpho Partner to Offer Instant 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 enables wallets, brokers, and fintech apps to provide users with the ability to instantly borrow stablecoins, such as USDC, using their crypto assets as collateral. The borrowing process is designed to be simple and user-friendly, similar to traditional Web2 experiences, while ensuring that it is non-custodial and fully onchain.

The partnership leverages Gelato’s Smart Wallet SDK and Morpho’s permissionless lending markets to create a seamless borrowing flow that can be integrated into platforms within days. Users can initiate loans through an onchain bank account powered by embedded wallet infrastructure, 7702-powered smart accounts, gasless transactions, and the ability to execute multiple transactions in a single click. This ensures that the entire process is governed by smart contracts, maintaining full decentralization and security.

Morpho, which recently partnered with Coinbase 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, utilized by companies such as Safe, Infinex, and Gnosis Pay, handles account abstraction, one-click onboarding, and gas sponsorship, allowing 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 cater to 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 that powers 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.