Bitwise’s New DeFi Vault on Morpho Lets Users Earn On-Chain Yield

This article was first published on The Bit Journal. Bitwise Asset Management has taken its first direct step into decentralized finance with the launch of an on-chain yield vault, marking a major milestone for the firm’s expanding Bitwise DeFi strategy.

The firm verified the launch of the product on 26 January and said that it is a non-custodial vault that is built on the Morpho protocol. Bitwise manages and curates the strategy, but all operations are entirely executed on-chain, leaving the user with full control of their assets. The launch brings Bitwise DeFi nearer to traditional asset management knowledge and decentralized financial infrastructure.

On-Chain Transparency Defines Bitwise DeFi Strategy

The first vault is a stablecoin lending vault starting with USD Coin (USDC). Bitwise explains that the strategy is based on overcollateralized lending pools, in which borrowers must ensure they place in excess collateral. By minimizing counterparty risk and ensuring transparency, this design is meant to be as transparent as possible since all positions and capital flows can be tracked on-chain an approach core to the Bitwise DeFi model.

Bitwise added that the vault is aiming to achieve up to 6 percent annual returns, but will react to market conditions. The money placed in the vault is lent out on the lending markets on Morpho, an open-source protocol that allows professional managers to deploy capital using uniform smart contracts instead of bespoke systems.

Bitwise DeFi Reflects Institutional Market Maturity

Jonathan Man, CFA, the head of Bitwise multi-strategy solutions group, oversees risk oversight and strategy design. The company said that the vault is based on its wider research, trading, and risk management infrastructure that has grown over years of operating crypto investment products. Such capabilities have become the foundation of expanding Bitwise DeFi activities in the firm.

The action is a strategic change on the side of Bitwise that has long been associated with exchange-traded products and research targeted at conventional investors. Entering the market with a non-custodial, on-chain product, Bitwise DeFi represents the shift to the development of native blockchain tools, instead of providing accessibility merely by providing exposure via regulated wrappers.

Morpho Emerges As Key On-Chain Platform

Morpho has become a major platform for such arrangements, enabling asset managers to develop lending plans based on audited smart contracts. Bitwise indicated that it considers on-chain vaults as one of the emerging market segments and intends to consider more decentralized approaches as part of its overall Bitwise DeFi roadmap.

Although the company has not yet provided any figures on performance or expansion timescales, it presented the launch as a first step toward a longer-term vision of on-chain. As capital moves more to blockchain-based finance, Bitwise DeFi indicates that traditional asset managers are starting to view decentralized finance as a core part of the infrastructure, and no longer a side project.

Conclusion

The introduction of the first on-chain vault by Bitwise is an important move towards the institutionalization of decentralized finance. Through non-custodial control, transparent lending, and professional strategy monitoring, Bitwise DeFi shows that the traditional asset managers are beginning to view blockchain-based finance as part and parcel of long-term investment infrastructure.

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Summary

• Bitwise launches first on-chain, non-custodial vault via Morpho.
• Vault starts with USDC, targeting up to 6% annual yield.
• Jonathan Man oversees strategy using Bitwise’s research and risk tools.
• Marks Bitwise’s DeFi entry, highlighting shift toward blockchain-based finance.

Glossary of Key Terms

Bitwise DeFi:  Bitwise’s decentralized finance initiative.
On-Chain Vault:  Investment executed directly on blockchain.
Non-Custodial:  Users keep full control of funds.
Morpho Protocol:  DeFi platform for lending via smart contracts.
Stablecoin:  Crypto pegged to stable assets, e.g., USDC.
USD Coin (USDC):  Dollar-backed stablecoin used in the vault.
Decentralized Finance (DeFi):  Financial services without intermediaries on blockchain.

Frequently Asked Questions about Bitwise On-Chain Vault

1. What is the on-chain vault?

A non-custodial DeFi vault on Morpho, which allows investors to receive yield with retainability of their money.

2. Which assets are supported?

The vault starts with USD Coin (USDC) and uses overcollateralized lending pools to reduce risk.

3. How is the vault managed?

Bitwise curates the strategy and deploys funds on-chain, with risk oversight led by Jonathan Man, CFA.

4. What returns can investors expect?

Annual yield targets of up to 6, as per market conditions, are fully on-chain.

Reference

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