Key Highlights
- The digital asset manager launched its first non-custodial onchain vault on Morpho, targeting up to 6% yield on stablecoins through overcollateralized lending.
- Users retain full control of funds, with all strategies executed transparently on-chain and risk managed by Bitwise’s team.
- The move marks Bitwise’s entry into DeFi infrastructure, signaling growing institutional adoption of onchain vaults.
Digital asset manager Bitwise has taken its first direct step into decentralized finance (DeFi) by launching non-custodial on-chain vaults in partnership with lending protocol Morpho.
The firm confirmed the launch on January 26, and it was a change of direction in its traditional emphasis on exchange-traded products and research targeting institutional investors.
A shift beyond ETFs and traditional crypto products
The new product allows users to earn yield on stablecoins while retaining full control of their funds. Instead of transferring custody, investors deposit assets into an onchain vault that is managed through smart contracts. Bitwise curates the strategy and oversees risk, but all execution happens transparently on-chain.
According to Bitwise, the first vault focuses on stablecoins and deploys capital into overcollateralized lending markets on Morpho. The strategy currently targets returns of up to 6% annually, though actual yields may vary depending on market conditions.
“Finance is moving onchain. Vaults are a key part of that, offering investors a transparent way to earn digital yield on their assets,” Bitwise said in a post on X announcing the launch.
How the vault works and why it matters
The vault allocates deposited funds to lending pools where borrowers provide excess collateral, reducing counterparty risk compared to unsecured lending models. All positions remain visible on-chain, and users can withdraw funds at any time, unlike some staking or locked-yield products.
Strategy design and real-time risk oversight are led by Jonathan Man, CFA, Bitwise’s Portfolio Manager and Head of Multi-Strategy Solutions. The firm said the vault leverages infrastructure and risk frameworks it has developed over several years managing crypto investment products.
“Decentralized finance, or DeFi, offers compelling yield opportunities, but the complexity of managing onchain risk has kept many investors on the sidelines,” Man said. “Bitwise provides value-add by layering professional guidance and risk management experience onto these non-custodial tools.”
The move comes as asset managers increasingly explore blockchain-based financial infrastructure rather than relying solely on regulated wrappers such as ETFs. While Bitwise has been best known for serving traditional investors, the Morpho vault signals a broader industry trend toward treating DeFi as core financial infrastructure.
Morpho’s growing institutional footprint
Morpho has become a prominent platform of curated lending strategies, where professional managers can create custom vaults with standardized smart contracts. The protocol is now the seventh-largest DeFi platform by total value locked (TVL), having a fund of approximately $6.7 billion, as per DeFiLlama.
The platform’s growth accelerated in late 2025 following partnerships with Coinbase, Crypto.com, and Société Générale’s digital asset unit SG-FORGE. Earlier this week, Morpho also announced that curated vaults from Sentora had been integrated into Kraken’s DeFi Earn program.
“Bitwise joining Morpho as a vault curator highlights growing institutional demand for allocating capital onchain through noncustodial infrastructure,” Morpho Co-Founder and CEO Paul Frambot said.
What comes next for Bitwise’s DeFi strategy
Bitwise has not disclosed performance data or timelines for expanding its vault offerings. However, the firm previously predicted that on-chain vaults, often described as “ETFs 2.0” could double assets under management in 2026.
The Morpho launch appears to be an early step in that longer-term strategy, as traditional asset managers cautiously deepen their involvement in decentralized finance.
Also Read: Bitwise Launches BPRO: The First Actively Managed ETF Combining BTC & Gold
