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Bitwise launches a non-custodial Vault on Morpho to target 6% APY via lending.
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The strategy managed by Jonathan Man focuses primarily on stablecoin pools that are overcollateralized.
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Asset manager enters DeFi infrastructure after years focusing on ETF products.
Bitwise has launched its first blockchain-based vault using the Morpho protocol. This provides investors with direct on chain yield opportunities. The crypto asset manager announced its launch on January 26, calling the product a non-custodial, decentralized strategy that is curated by Bitwise experts.
The vault allows the user to retain control of their capital, while Bitwise decides on how funds are distributed across lending markets. This structure eliminates the need to transfer custody to centralized platforms, or even the asset manager. All positions are visible and transparent on blockchain networks.
Stablecoin Lending Structure
The initial vault focuses on stablecoins strategies, starting with USD Coin. It is built around overcollateralized loan pools that operate on Morpho. Bitwise said the strategy aims to achieve returns of around 6% per year, but actual performance will vary depending on market conditions.
Capital deposited in the vault is transferred to lending markets, where borrowers are required to post collateral that exceeds loan values. This reduces counterparty exposure. This overcollateralization requirement provides a buffer against borrower defaults or collateral value declines.
Jonathan Man, who heads Bitwise’s Multi-Strategy Solutions Group, oversees the design of strategy and ongoing risk management. The firm stressed that the vault leverages research, trading and risk infrastructure developed by more than eight years of operating cryptocurrency investment products.
DeFi infrastructure is now a core business focus
The Morpho vault marks Bitwise’s direct entry into noncustodial, decentralized finance strategies. Previously, Bitwise focused on exchange-traded product and research to serve traditional investors who wanted to gain exposure to cryptocurrency through regulated vehicles.
Morpho is a platform which allows professional managers to create lending strategies using smart contracts that are standardized. The protocol separates the strategy curation process from the execution infrastructure. This allows asset managers to concentrate on risk management and allocation decisions.
Bitwise described on-chain vaults a growing segment of the market and shared plans to explore other strategies over time. The firm hasn’t released any performance data or timelines for its expansion.
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