Privy evolves into financial infrastructure for fintechs with Morpho-powered yield
Privy, the embedded wallet infrastructure company acquired by Stripe in 2025, just made a move that signals where fintech and DeFi are quietly merging. The company launched an “Earn on balances” feature that pipes Morpho’s non-custodial lending vaults directly into its API, letting any app offer yield on user deposits without touching a single DeFi protocol themselves.
Two names already using it: Deel, the global payroll platform, and Kraken. The latter has routed more than $500 million in combined stablecoin and BTC deposits through Privy’s integrations into Morpho vaults.
How the plumbing works
The technical backbone is Morpho’s ERC-4626 vaults. These are standardized smart contracts on Ethereum that pool user funds into lending markets to generate yield. The ERC-4626 standard matters because it creates a common interface. Any app that speaks the same language can plug in without custom engineering for each vault.
Privy’s API handles deposit, withdraw, and revenue sharing, routing funds to curated vaults vetted by independent risk managers. Those risk managers include Steakhouse Financial and Gauntlet. Sentora handles the vaults powering Deel’s integration specifically.
The result is a product that looks like a simple “earn interest” toggle inside an app but runs on fully non-custodial DeFi rails underneath. Users’ funds sit in smart contracts, not in Privy’s bank account.
Deel and Kraken: two very different use cases
Deel’s integration lets freelancers and contractors earn yield on their dollar-backed balances across more than 150 countries. The vaults Deel uses are curated by Sentora.
Kraken’s integration has channeled more than $500 million in stablecoin and BTC deposits through Privy’s infrastructure into on-chain yield. A third partner, Stablerail, uses the infrastructure for compliant treasury workflows.
From wallet provider to financial infrastructure
Privy was acquired by Stripe in 2025. This launch adds deposit, withdraw, and revenue sharing functionality to what was previously a wallet creation and key management product.
Morpho secured $175 million in a funding round that closed on June 9, 2026.
What this means for investors
When apps like Deel enable yield on USDC balances for contractors globally, those stablecoins need to exist, need to be held, and need to stay in circulation longer. Every dollar earning yield in a Morpho vault is a dollar not being redeemed.
Kraken routing BTC deposits into on-chain yield suggests growing demand for Bitcoin-denominated lending markets.
Risk management is the variable that could make or break this model. Independent curators like Gauntlet and Steakhouse Financial add credibility, but DeFi lending markets carry inherent smart contract risk, oracle risk, and liquidity risk. A single vault exploit affecting Deel’s contractor balances would be a very different headline than a DeFi hack affecting anonymous wallets, and the reputational fallout would extend to Stripe itself.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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