- The initial strategy focuses on USDC stablecoin lending through overcollateralised pools on Morpho.
- Bitwise said the strategy currently targets returns of up to 6%, depending on market conditions.
- The launch signals a broader shift by asset managers toward building and managing on-chain infrastructure.
Bitwise has taken a clear step beyond exchange-traded products by launching its first non-custodial on-chain yield strategy, signalling a deeper push into decentralised finance infrastructure.
The firm confirmed the launch on Jan. 26, positioning the new product as an on-chain vault curated by Bitwise but executed entirely through smart contracts.
Users retain control of their assets at all times, while Bitwise oversees how capital is allocated across decentralised lending markets.
The move highlights how traditional crypto asset managers are increasingly experimenting with direct DeFi exposure rather than relying solely on regulated wrappers.
Non-custodial vault structure
The new product is structured as a non-custodial vault, meaning users do not transfer control of their funds to Bitwise or to any centralised intermediary.
Instead, assets remain in user-controlled wallets and are deployed on-chain according to predefined rules.
Bitwise manages the strategy parameters, but all activity takes place transparently on public blockchains.
This setup is designed to appeal to investors who want exposure to on-chain yield without sacrificing custody.
All positions are visible on-chain, allowing users to track where funds are deployed in real time.
The firm has framed this as a way to combine professional portfolio management with the core principles of decentralised finance.
Stablecoin yield focus
The initial vault focuses on stablecoin lending, starting with USD Coin USDC.
Deposited funds are allocated to overcollateralised lending pools, where borrowers must post excess collateral to secure loans.
This structure is intended to limit counterparty risk compared with undercollateralised lending models.
The strategy is built on Morpho, a decentralised lending protocol that allows asset managers to design customised lending strategies while relying on standardised smart contracts.
According to Bitwise, the vault currently targets returns of up to 6% annually, depending on market conditions.
The firm has emphasised that yields will fluctuate based on on-chain supply and demand rather than being fixed or guaranteed.
Risk management on-chain
Bitwise said strategy design and ongoing risk oversight are led by Jonathan Man, CFA, who heads the firm’s multi-strategy solutions group.
The vault draws on Bitwise’s existing research, trading, and risk infrastructure, which has been developed through years of managing crypto investment products.
Smart contract execution ensures that positions are managed automatically according to predefined rules, while transparency allows users to independently verify activity.
Bitwise has not disclosed performance data so far, noting that the vault is still in its early stages.
Asset managers eye DeFi infrastructure
The Morpho vault represents Bitwise’s first direct move into non-custodial DeFi strategies.
Until now, the firm has primarily been associated with exchange-traded products and research aimed at traditional investors.
This launch marks a shift toward building and managing on-chain tools rather than offering exposure solely through off-chain products.
Morpho has gained traction as a platform for professional-grade DeFi strategies, enabling managers to deploy capital programmatically while maintaining on-chain transparency.
Bitwise has said it views on-chain vaults as a growing segment of the crypto market and plans to explore additional strategies over time.
While the firm has not shared timelines for expansion, it has described the vault as an early step in a longer on-chain roadmap.
As more capital flows into blockchain-based finance, Bitwise’s move suggests that asset managers are increasingly treating DeFi as core financial infrastructure rather than a peripheral experiment.
