Privy Unveils 'Earn on Balances' Feature with Morpho-Powered Yield

Privy, an embedded wallet infrastructure company acquired by Stripe in 2025, has made significant strides in merging fintech and DeFi by launching its 'Earn on balances' feature. This innovation enables any app to offer yield on user deposits without directly interacting with a single DeFi protocol.

The technical backbone of this system is Morpho's ERC-4626 vaults, standardized smart contracts on Ethereum that pool user funds into lending markets to generate yield. The ERC-4626 standard creates a common interface, allowing any app to 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. Two notable users of this feature are Deel, the global payroll platform, and Kraken. Deel allows freelancers and contractors to earn yield on their dollar-backed balances across more than 150 countries, while Kraken has routed over $500 million in stablecoin and BTC deposits through Privy's infrastructure into on-chain yield.

This development marks a shift from Privy being solely a wallet creation and key management product to becoming financial infrastructure. The success of this model relies heavily on risk management, with independent curators like Gauntlet and Steakhouse Financial adding credibility. However, DeFi lending markets carry inherent smart contract risk, oracle risk, and liquidity risk that could make or break the model.