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Bitwise Asset Management launched its first decentralized finance product on January 26, introducing a non-custodial vault on the Morpho lending protocol that targets 6% annual yields for institutional investors deploying stablecoins.
The move by the San Francisco-based crypto asset manager, which oversees billions in client assets, marks a notable shift toward institutional participation in DeFi lending markets that have historically been dominated by retail users and crypto-native funds.
The Bitwise vault operates on Morpho’s programmable infrastructure, which uses smart contracts to allocate deposited stablecoins across a portfolio of lending positions designed to earn yield through decentralized markets.
Unlike custodial products where a third party holds assets, Bitwise’s non-custodial structure ensures that funds remain on the blockchain under investor control, reducing custodian counterparty risk.
Jonathan Man, CFA, Bitwise’s Portfolio Manager and Head of Multi-Strategy Solutions and DeFi Strategies, said the initiative aims to bridge the gap between institutional oversight and DeFi infrastructure.
“Decentralized finance offers compelling yield opportunities, but the complexity of managing on-chain risk has kept many investors on the sidelines. That’s why we’re so excited for Bitwise to enter vault curation.“
By combining professional strategy design and real-time risk management with open-source DeFi protocols, Bitwise hopes to make yield generation more accessible to sophisticated investors without sacrificing transparency.
The announcement also highlights growing institutional interest in using decentralized infrastructure to deploy capital.
Paul Frambot, co-founder and CEO of Morpho, framed Bitwise’s participation as a signal of demand for non-custodial, programmable yield strategies.
Analysts and industry observers have noted that such vaults could become core building blocks of institutional DeFi portfolios, akin to fixed-income funds in traditional finance but executed via smart contracts.
In Bitwise’s own recent research, the firm predicted that on-chain vault assets under management could double in 2026, a forecast that displays confidence in steady inflows from institutional investors seeking yield alternatives outside traditional markets.
While the yield potential is attractive, participation in DeFi vaults carries inherent risks. Smart contract vulnerabilities, oracle failures, and rapid market moves can expose depositors to losses, and unlike traditional bank products, funds in DeFi are generally not insured by government protections.
Experts caution that even with professional management and risk frameworks, decentralized yield products require careful due diligence.
Despite these risks, Bitwise’s launch marks a notable step in the institutionalization of DeFi. The firm has signaled intentions to expand beyond USDC, potentially adding other stablecoins and broader strategies.
As decentralized finance continues to evolve, products like Bitwise’s Morpho vault may play a significant role in shaping how institutional and retail investors alike approach yield in crypto markets.
