Integrate crypto-backed loans into your app using Gelato’s Smart Wallet SDK and Morpho’s lending protocol. This guide walks you through setting up embedded wallet onboarding and implementing both the Supply/Earn and Borrow flows.
This guide assumes you’re using React + TypeScript.

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Smart Wallet Onboarding Setup

Before users can supply or borrow assets, they must onboard into a Smart Wallet via a frictionless embedded flow. Powered by Gelato’s SDK and Dynamic, users can create smart accounts using just their email, social login, or passkeys — no browser extensions or seed phrases needed.

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Key Features of Embedded Wallets

  • EIP-7702 & ERC-4337 compliant
  • Supports gasless transactions (sponsored execution)
  • Runs across 50+ EVM chains
  • Session-based login — no need to reconnect every time
Smart Wallet Onboarding

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Code Snippet

Embed the following setup within your app to configure the provider: 
<GelatoSmartWalletContextProvider
  settings={{
    scw: {
      type: "gelato",
    },
    apiKey: process.env.NEXT_PUBLIC_GELATO_API_KEY as string,
    waas: dynamic(
      process.env.NEXT_PUBLIC_MORPHO_DYNAMIC_ENVIRONMENT_ID as string
    ),
    wagmi: wagmi({
      chains: [baseSepolia],
      transports: {
        [baseSepolia.id]: http(),
      },
    }),
  }}
>
  <QueryClientProvider client={queryClient}>
    <ActivityLogProvider>
      <RouteGuard>
        {children}
        <Toaster />
      </RouteGuard>
    </ActivityLogProvider>
  </QueryClientProvider>
</GelatoSmartWalletContextProvider>
This context enables smart wallet access throughout your app, setting up:
  • Wallet creation and session
  • Transaction preparation and sending
  • Provider availability across your components
const { gelato: { client }, logout} = useGelatoSmartWalletProviderContext();

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Part 1: Supply & Earn

Allow users to supply assets (e.g., USDC) and earn yield in Morpho’s vaults — fully onchain, without user signatures or gas fees.

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Flow Overview

  • Approve vault to spend USDC
  • Deposit USDC to Morpho vault
  • Optionally, record stats to external tracking contract
Supply & Earn Flow

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Code Snippet

const calls = [
  {
    to: USDC_ADDRESS,
    data: encodeFunctionData({
      abi: tokenABI,
      functionName: "approve",
      args: [MORPHO_VAULT_ADDRESS, parseUnits(amount, 6)],
    }),
  },
  {
    to: MORPHO_VAULT_ADDRESS,
    data: encodeFunctionData({
      abi: morphoVaultABI,
      functionName: "deposit",
      args: [parseUnits(amount, 6), smartWallet.address],
    }),
  },
  {
    to: VAULT_STATS_ADDRESS,
    data: encodeFunctionData({
      abi: vaultStatsABI,
      functionName: "deposit",
      args: [parseUnits(amount, 6), userAssets, totalAssets],
    }),
  },
];

const response = await smartWalletClient.execute({
  payment: sponsored(GELATO_API_KEY),
  calls,
});

console.log("userOp Hash", response.id);
const txHash = await response.wait();
Users never sign a transaction or pay gas. All logic executes onchain using their smart account.

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Part 2: Borrow

Let users borrow stablecoins (like USDC) using crypto collateral (cbBTC) — trustless, non-custodial, and instant.

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Flow Overview

  • Approve Morpho to move collateral
  • Supply collateral to Morpho
  • Borrow USDC
Borrow Flow

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Code Snippet

const approveCall = {
  to: COLLATERAL_TOKEN_ADDRESS,
  data: encodeFunctionData({
    abi: tokenABI,
    functionName: "approve",
    args: [MORPHO_MARKET_ADDRESS, collateralAmount],
  }),
};

const supplyCollateralCall = {
  to: MORPHO_MARKET_ADDRESS,
  data: encodeFunctionData({
    abi: morphoABI,
    functionName: "supplyCollateral",
    args: [marketParams, collateralAmount, smartWallet.address, "0x"],
  }),
};

const borrowCall = {
  to: MORPHO_MARKET_ADDRESS,
  data: encodeFunctionData({
    abi: morphoABI,
    functionName: "borrow",
    args: [
      marketParams,
      borrowAmount,
      BigInt(0),
      smartWallet.address,
      smartWallet.address,
    ],
  }),
};

const response = await smartWalletClient.execute({
  payment: sponsored(GELATO_API_KEY),
  calls: [approveCall, supplyCollateralCall, borrowCall]
});

console.log("userOp Hash", response.id);
const txHash = await response.wait();

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Summary

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What You Can Build

Using these flows, your app can now offer:
  • Embedded lending dashboards
  • Crypto credit lines
  • Non-custodial stablecoin loans
  • Yield vault integrations
  • Composable DeFi automations
You get the power of Morpho and the abstraction of Gelato — without the overhead of building wallets, managing custody, or dealing with onchain UX friction.