Bitwise announced on January 27, that it has launched non‑custodial on‑chain vaults built on the Morpho lending protocol, marking the firm’s direct entry into decentralized finance. The initial strategy targets up to 6% APY on stablecoins, primarily USDC, and preserves user control by keeping assets on‑chain.
Bitwise’s inaugural vault allocates capital into Morpho’s overcollateralized lending pools to generate stablecoin yield. Bitwise described the strategy as targeting “6% APY, investing in overcollateralized lending pools,” and emphasised that the vaults are non‑custodial; users retain asset custody at all times, according to the firm’s announcement on X and contemporaneous reporting by KuCoin and Bitget.
Jonathan Man, Bitwise’s Portfolio Manager and Head of Multi‑Strategy Solutions, will lead vault curation, strategy design and real‑time risk controls. The arrangement places Bitwise in a curator role — designing strategies and operating risk frameworks — while leaving execution and asset custody on‑chain within Morpho’s infrastructure.
Bitwise pitched the product as a bridge between traditional asset management standards and DeFi execution, offering curated on‑chain strategies for investors unwilling to manage complex on‑chain operational risks themselves.
Morpho’s co‑founder and CEO, Paul Frambot, commented on X: ‘Excited to see the vault curation model continue to scale, with the largest financial institutions in the world leaning in.’ That endorsement highlights the broader institutional interest driving this design.
Institutional framing, risks and market implications
Operationally, the offering layers firm‑level risk governance over existing DeFi primitives. That reduces some decision friction for institutional users, but it does not eliminate smart‑contract, counterparty or liquidity risks inherent to on‑chain lending markets.
Market participants should weigh the predictable nominal yield (the 6% target) against potential drawdowns from protocol exploits, liquidation events in stressed markets, or changes in Morpho’s lending economics.
Bitwise has signaled plans to expand the vault lineup beyond stablecoins into areas such as RWA tokenization, DEX liquidity provision and yield farming. The firm has also forecast that on‑chain vaults could double their assets under management in 2026, a projection that will serve as an early performance test for this curation model, according to coverage in industry outlets.
For traders, treasuries and institutional allocators, the practical implication is clear: these vaults offer a packaged on‑chain yield product with institutional governance, but users must still manage protocol and execution risks.
Investors and market watchers will in the coming months track flows into Bitwise’s vaults and whether the projected AUM growth in 2026 materializes; that growth will function as an early indicator of institutional appetite for managed, on‑chain yield strategies.
