Bitwise Launches Onchain Vault With Morpho, Targets 6% USDC Yield

Bitwise Asset Management has entered the decentralized finance, or DeFi, sector with the launch of its first on-chain vault strategy through the decentralized lending protocol Morpho+8.66% Morpho+8.66% $1.24.

Jonathan Man, head of multi-strategy solutions and portfolio manager at Bitwise, told The Block that the inaugural vault aims to achieve up to 6% income on the USDC stablecoin by allocating funds into “over-collateralized” lending markets on Morpho. In addition to a wider range of DeFi tactics, such as yield farming, decentralized exchange liquidity provision, and tokenization of real-world assets, Man stated that other significant stablecoins and cryptocurrency assets might be supported in the future.

Bitwise, widely known for its cryptocurrency exchange-traded funds, stated that its carefully chosen onchain vault techniques are intended to make DeFi more accessible to investors who wish to be exposed to onchain yield without having to handle intricate risk criteria on their own.

Bitwise Launches Onchain Vault With Morpho

“Decentralized finance, or DeFi, offers compelling yield opportunities, but the complexity of managing onchain risk has kept many investors on the sidelines,” Man stated. “That's why we're so excited for Bitwise to enter vault curation. Bitwise provides a critical value-add by layering institutional-grade risk management and regulated oversight onto these non-custodial tools.” Under the structure, Bitwise is in charge of strategy design and real-time risk management, while user funds are held onchain and remain non-custodial.

Bitwise is in charge of strategy design and real-time risk management under the structure, while user money are kept onchain and non-custodial. Vaults use smart contracts to automatically distribute capital within predetermined risk limitations, much like a portfolio of loan positions.

Bitwise recently referred to onchain vaults as “ETFs 2.0” and stated that it anticipates a doubling of the assets under management in vaults this year. According to Bitwise, vaults started to become popularity in 2024 and increased their assets from less than $100 million to $2.3 billion. Before market turbulence in October revealed poor risk management across various strategies and resulted in losses and outflows, interest intensified in 2025, with assets reaching a peak of $8.8 billion, according to the business. It further stated that the withdrawal was a necessary reset, claiming that better vault curators will draw in new funding during the next round of expansion.

Major cryptocurrency platforms are focusing more and more on onchain yield products. Kraken unveiled a new “DeFi Earn” product earlier today that aims for payouts of up to 8% and is based on Veda's vault technology.

Paul Frambot, CEO and co-founder of Morpho, told The Block that although Coinbase has been providing onchain loans through Morpho for over a year, it does not serve as a vault curator.

DeFi lending entails risks, such as smart contract weaknesses and losses if collateral values drop too quickly, even while vaults provide onchain transparency and automation. Onchain vaults are not insured, in contrast to typical financial products, and lenders within the same vault may share losses.