Bitwise Asset Management has officially marked its entry into the world of decentralized finance (DeFi) with the launch of its first onchain vault through the Morpho lending protocol.
The goal is clear: to offer investors an annual yield of up to 6% on USDC, the popular stablecoin pegged to the US dollar.
This initiative represents a strategic step for Bitwise, aiming to make DeFi more accessible and secure, especially for those seeking exposure to onchain yields without having to directly manage the complexity of risk parameters.
How the Bitwise Vault Works on Morpho
The new Bitwise vault operates by allocating capital in Morpho’s over-collateralized lending markets. In practice, users can deposit USDC and earn a yield that, according to projections, can reach up to 6% annually.
Unlike many staking protocols that lock funds for predetermined periods, the Bitwise vault allows deposits and withdrawals at any time, thus offering superior flexibility.
The management of strategy and risk is entrusted to Bitwise, which oversees the design and selection of lending positions through smart contracts. These contracts automatically allocate capital within predefined risk limits, keeping the funds non-custodial and always under the users’ control on the blockchain.
An Institutional Approach to Risk Management
Leading the initiative is Jonathan Man, portfolio manager at Bitwise and head of multi-strategy solutions. Man emphasizes that the goal is to simplify access to DeFi yields for a broader range of investors. “Bitwise provides a fundamental added value by overlaying institutional-level risk management and regulated oversight on these non-custodial instruments,” stated Man.
Bitwise doesn’t stop here: plans are already underway to expand the offering to other stablecoins and DeFi strategies, including the tokenization of real-world assets, decentralized liquidity provision for exchanges, and yield farming.
Morpho: a Rapidly Rising Platform
The Morpho protocol has quickly established itself as one of the leading DeFi platforms, ranking seventh in total value locked (TVL), with $6.7 billion. An impressive figure, considering that at the beginning of 2025, the TVL was $3.2 billion. Morpho’s growth has also been supported by strategic partnerships, such as the one with Coinbase for bitcoin-backed loans, which pushed the TVL to approximately $4 billion as early as January 2025.
Despite an attempted attack in April that temporarily reduced the TVL to $2.5 billion, the platform demonstrated resilience: the attack was halted without any loss of funds and, in the following months, Morpho continued to strengthen its position thanks to collaborations with players like Crypto.com and Société Générale’s digital division, SG-FORGE. By November, the TVL reached a new peak of $8.5 billion.
The Growth of DeFi Vaults and the Role of Bitwise
DeFi vaults are experiencing an exponential growth phase. According to a recent report by Bitwise, these products have increased from less than $100 million to $2.3 billion in assets in 2024, then reaching a peak of $8.8 billion in 2025. Bitwise forecasts that the assets managed by onchain vaults will double by 2026, describing these instruments as the new “ETF 2.0” of digital finance.
However, the market volatility of October 2025 highlighted some weaknesses in the risk management of certain vaults, causing losses and outflows. Bitwise interprets this “pullback” as a necessary reset, convinced that the next growth phase will be driven by vault curators with higher quality standards.
New Partnerships and Competition in the Sector
The Morpho ecosystem continues to attract new players. This week, the platform announced the integration of its vaults curated by Sentora with Kraken’s DeFi Earn program. The latter also launched a new product based on Veda’s vault infrastructure, offering potential returns of up to 8%.
Coinbase has also been offering onchain loans through Morpho for over a year, although it does not act as a vault curator. “Exchanges like Coinbase offer Morpho vaults to their users so they can earn yield in a non-custodial manner,” explained Paul Frambot, co-founder and CEO of Morpho. “Bitwise is joining Morpho as a curator, and they will directly manage non-custodial onchain vault strategies.”
Despite its growth, Morpho still lags behind Aave, the leader in the DeFi lending sector, which boasts a total value locked exceeding $34 billion.
A Look into the Future of DeFi
The entry of Bitwise as a vault curator on Morpho represents a significant signal for the entire DeFi sector. The adoption of institutional-level risk management strategies and the growing collaboration between decentralized platforms and major names in traditional finance suggest that DeFi is ready for a new phase of maturity.
With the prospect of competitive returns, enhanced security, and accessibility, DeFi vaults could truly become the ETFs 2.0 of the new digital economy, attracting increasingly substantial capital and solidifying the role of decentralized finance in the global landscape.
Source: https://en.cryptonomist.ch/2026/01/27/bitwise-makes-its-defi-debut-new-vault-on-morpho-targets-a-6-yield-on-usdc/
