- Crypto.com plans to offer customers DeFi-backed loans.
- Lending protocol Morpho will facilitate them.
- It's a similar deal to the one Coinbase made with Morpho in January.
Crypto.com plans to offer customers the ability to borrow against their crypto deposits following the success of a similar feature on rival exchange Coinbase.
On Thursday, the crypto exchange announced a partnership with Morpho, the second-biggest decentralised finance lending protocol. Morpho will facilitate the loans and deploy its lending protocol on Cronos, a blockchain created by Crypto.com, as part of the tie-up.
“Our mission has always been to accelerate the world’s transition to cryptocurrency, and this collaboration with Morpho and Cronos is a powerful step in that direction,” Ketat Sarakune, head of yield and asset growth at Crypto.com, said in comments shared with DL News.
The integration will give Crypto.com customers the ability to leverage their crypto holdings without cashing them out. The deal will enable Morpho to tap the exchange’s customers and grow its deposits.
Crypto.com is the sixth-largest crypto exchange globally. It handled $86 billion worth of trades last month, according to newhedge, a crypto data platform.
The first Morpho integrations are anticipated to go live before the end of the year. When they do, Crypto.com will be the second crypto exchange to offer DeFi-backed loans through the protocol.
In January, Morpho partnered with Coinbase for a similar initiative. It has proven popular. The total amount of Morpho loans originating from Coinbase surpassed $1 billion earlier this week.
The ‘DeFi mullet’
The development comes as crypto lending solidifies itself as the dominant DeFi use case.
Deposits to DeFi lending protocols hit an all-time high of $138 billion in September, according to DefiLlama data.
Morpho, which has grown its deposits by 121% this year to $11.5 billion, is taking full advantage of the increased demand.
On Tuesday, Société Générale, one of Europe’s largest banks, announced it is integrating its stablecoins with Morpho to open up DeFi lending to its institutional customers.
A Morpho spokesperson told DL News the protocol is in talks with more fintechs, exchanges, institutions, and asset managers to build their financial applications on top of its protocol.
Such integrations are examples of the so-called “DeFi mullet” strategy that many protocols are embracing in a bid to expand to new markets and capture more deposits.
The term refers to abstracting away the complexities of interacting directly with DeFi behind a simpler consumer-facing interface. In other words, centralised crypto exchanges like Crypto.com in the front, and the messy technical aspects of DeFi hidden in the back.
Morpho and Cronos will work together to launch new stablecoin lending markets backed by Crypto.com’s wrapped versions of Bitcoin and Ethereum. The pair are also exploring the use of wrapped real-world assets as collateral.
The new markets will add to Crypto.com’s existing DeFi integration with top lending protocol Aave, which lets customers lend out their Ethereum deposits to earn yield.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
