In a significant move aimed at reshaping crypto borrowing, Gelato has partnered with Morpho to roll out Embedded Crypto-Backed Loans—a modular, non-custodial lending solution designed to seamlessly integrate into digital wallets, brokerages, and fintech applications. The joint offering allows users to borrow stablecoins like USDC by pledging digital assets such as BTC as collateral, all while maintaining complete control over their funds.
This collaboration brings together Gelato’s Smart Wallet SDK and Morpho’s decentralized lending infrastructure to deliver a white-labeled lending framework that can be deployed quickly by platforms seeking to embed crypto-native financial services. The solution is crafted for fast onboarding and ease of use, offering a Web2-like user experience in a fully decentralized setting.
Lending Meets Self-Custody in a Unified Flow
The system enables users to access loans directly through wallet interfaces, using simple authentication methods such as email, social logins, or passkeys. This ease of access is designed to mirror the simplicity of modern banking apps while adhering to the principles of self-custody and decentralization. Transactions are entirely on-chain and non-custodial, meaning users never forfeit control of their digital assets.
According to Morpho Labs’ leadership, the project exemplifies the goal of enabling more platforms to offer crypto-backed loans while maintaining user autonomy. The infrastructure has been purpose-built for integration, and Gelato’s SDK provides the tools needed to ensure a smooth user journey.
The embedded loan system supports borrowing against a wide range of crypto assets with no requirement for credit checks or traditional KYC processes. The platform leverages Smart Wallets based on the EIP-7702 standard to deliver secure, gasless transactions across more than 50 EVM-compatible blockchains. Features such as one-click wallet creation and instant loan execution further simplify the borrowing experience.
Scalable, Customizable, and Ready to Deploy
Both Web3-native and traditional financial platforms are expected to benefit from this turnkey solution. Developers have the ability to retain full control over branding while offering an integrated borrowing interface. The embedded approach significantly reduces the time to market, allowing platforms to launch lending features in just days.
Morpho brings considerable strength to the partnership through its $6.5 billion in total value locked (TVL) and a recently announced collaboration with Coinbase to enable BTC-backed loans. Gelato, on the other hand, contributes its robust infrastructure that powers well-known platforms such as Safe, Gnosis Pay, and Infinex.
Try the full lending experience 👇https://t.co/Mz7UmO0FVG
— Gelato (@gelatonetwork) June 25, 2025
The partnership aims to democratize access to decentralized finance by embedding core lending features into applications that people already use. Both retail users and institutional clients can engage with the system through a simple, single-click experience that balances user-friendly design with rigorous transparency.
Future Enhancements Target Security and User Control
Later in 2025, Gelato plans to enhance its smart wallet offering with advanced security features. These include multi-signer two-factor authentication, passkey-based logins, and on-chain recovery mechanisms tied to email and social accounts. All upgrades will be implemented at the smart contract level to preserve the decentralized architecture of the system while strengthening user safeguards.
Morpho has already made a live demo of the solution available, showcasing the borrowing process from wallet setup to collateralized loan execution. Beta access is currently live on multiple chains including Polygon, Arbitrum, Optimism, and Scroll, with support for Katana and additional chains in progress.
Together, Gelato and Morpho are setting a new standard for decentralized borrowing—bringing accessible, secure, and programmable lending infrastructure into the core of consumer and enterprise applications.
