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- Bitwise launches its first non-custodial DeFi vaults through a partnership with Morpho.
- New on-chain vault targets stablecoin yield via overcollateralized lending markets.
- Morpho’s fast-rising institutional ecosystem supports Bitwise’s wider DeFi expansion strategy.
Bitwise expanded its product lineup on January 26 by launching its first non-custodial on-chain vaults in collaboration with lending protocol Morpho. The move marks a shift from its focus on exchange-traded products and signals a broader push into decentralized finance.
Bitwise said the new vault model allows users to earn yield on stablecoins while keeping full control of their assets. Investors deposit funds directly into smart contracts rather than transferring custody to an external manager. Bitwise selects the strategy and manages risk, while execution remains transparent on-chain.
The first vault deploys capital into overcollateralized lending markets on Morpho. Bitwise stated that the strategy targets returns of up to 6% annually, although yields can vary in changing market conditions. The firm described the vault structure as a practical way for users to access digital yield without relying on custodial platforms.
Risk Management and User Control in the Vault
The vault allocates deposits to lending pools where borrowers post collateral greater than the amount borrowed. This reduces counterparty risk compared with unsecured lending products. All positions remain visible on the blockchain, and users retain the ability to withdraw funds at any time.
Bitwise’s Portfolio Manager and Head of Multi-Strategy Solutions, Jonathan Man, CFA, is responsible for the design and risk management of the vault. He said that DeFi is an attractive source of yields but that investors have shied away from on-chain investment strategies due to their complexity. Bitwise is seeking to leverage non-custodial technologies with professional expertise.
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This is part of a larger trend that is seeing asset managers look to blockchain-based financial infrastructure. Asset managers that have relied on ETFs or other vehicles are now seeking to leverage blockchain technologies. The Bitwise move is an indication that DeFi is becoming an increasingly important component of asset portfolios.
Morpho’s Expanding Institutional Role in DeFi Lending
Morpho has gained attention for providing curated lending strategies through standardized smart-contract vaults. The protocol is the seventh-largest DeFi platform, with approximately $6.728 billion in total locked value, according to DeFiLlama. Its growth accelerated in late 2025 following collaborations with Coinbase, Crypto.com, and Société Générale’s digital-asset unit SG-FORGE.
Morpho confirmed earlier this week that Kraken’s DeFi Earn program now includes curated vaults from Sentora. Morpho Co-Founder and CEO Paul Frambot said Bitwise’s participation highlights rising institutional interest in non-custodial infrastructure for capital deployment.
Bitwise has not shared performance results for the vault or plans for future products. The firm previously stated that on-chain vault adoption could increase significantly in 2026. The Morpho launch appears to set the foundation for a broader expansion of Bitwise’s DeFi strategy.
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