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Bitwise Asset Management has launched its first onchain vault strategy via the decentralized lending protocol Morpho, marking the firm’s entry into the decentralized finance or DeFi market.
The initial vault targets up to 6% yield on the USDC stablecoin by deploying capital into “over-collateralized” lending markets on Morpho, Jonathan Man, Bitwise’s head of multi-strategy solutions and portfolio manager, told The Block. Man said other major stablecoins and crypto assets could be supported in the future, alongside a broader set of DeFi strategies, including real-world asset tokenization, decentralized exchange liquidity provision, and yield farming.
Bitwise, which is best known for its crypto exchange-traded funds, said its curated onchain vault strategies are designed to make DeFi more accessible to investors who want exposure to onchain yield without managing complex risk parameters themselves.
“Decentralized finance, or DeFi, offers compelling yield opportunities, but the complexity of managing onchain risk has kept many investors on the sidelines,” Man said. “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 oversees strategy design and real-time risk management, while user funds remain non-custodial and held onchain. Vaults function similarly to a portfolio of lending positions, using smart contracts to automatically allocate capital within predefined risk limits.
‘ETFs 2.0’
Bitwise recently described onchain vaults as “ETFs 2.0” and said it expects assets under management in vaults to double this year. Vaults began gaining traction in 2024, growing from less than $100 million to $2.3 billion in assets, Bitwise noted at the time. Interest accelerated in 2025, with assets peaking at $8.8 billion, before market volatility in October exposed weak risk management across some strategies and led to losses and outflows, the firm said. It added that the pullback was a necessary reset, arguing that higher-quality vault curators will attract fresh capital in the next phase of growth.
Onchain yield products have increasingly become a focus for major crypto platforms. Earlier today, Kraken announced a new “DeFi Earn” product built on vault infrastructure from Veda, targeting yields of up to 8%.
Coinbase, meanwhile, has offered onchain lending through Morpho for more than a year, but it does not act as a vault curator, Morpho co-founder and CEO Paul Frambot told The Block.
“Exchanges like Coinbase offer Morpho vaults to their users so they can earn yield in a non-custodial way. In that setup, Coinbase focuses on distribution and user experience. It does not manage the onchain strategies itself,” Frambot said. “Those vaults need a curator to design the strategy, manage risk, and allocate capital onchain in a non-custodial way. Bitwise is joining Morpho as a curator, they will directly curate non-custodial vault strategies onchain, that then will be distributed in fintechs, exchanges, … that want yield on their stablecoins.”
While vaults offer onchain transparency and automation, DeFi lending carries risks, including smart contract vulnerabilities and losses if collateral values fall too quickly. Unlike traditional financial products, onchain vaults are not insured, and losses can be shared among lenders within the same vault.
