Digital asset management firm Bitwise has teamed up with decentralized finance (DeFi) lending protocol Morpho to launch non-custodial on-chain vaults aimed at generating yield.
The move was announced on X on Monday, with Bitwise noting that its first vault will target an annual percentage yield of 6% by investing in overcollateralized lending pools.
“Finance is moving onchain. Vaults are a key part of that, offering investors a transparent way to earn digital yield on their assets,” Bitwise said.
Bitwise’s onchain vaults via Morpho
Bitwise will deploy multiple strategies across vaults on Morpho, with the firm’s “curation, strategy, and risk management” being led by Bitwise portfolio manager and head of multi-strategy solutions, Jonathan Man.
Onchain vaults to double AUM in 2026: Bitwise
The move comes just a month after Bitwise forecasted that on-chain vaults, which it dubbed “ETFs 2.0,” would double in assets under management in 2026.
In the report, Bitwise likened vaults to “onchain investment funds,” explaining that users can simply deposit assets into a vault, with a third party then managing the assets and utilizing them to generate yield across decentralized finance.
“We believe a wave of high-quality curators will enter the market in 2026, drawing billions of dollars of capital into the vaults they manage. The space will grow so fast it’ll catch the attention of major financial publications. One of them — Bloomberg, The Wall Street Journal, or the Financial Times — will label vaults ‘ETFs 2.0,’” Bitwise said.
A key aspect of the onchain vaults is that users can deposit or withdraw their funds at any time, with the funds not locked like they are in certain staking protocols. On the curator side, they see returns via “management and/or performance fees.
“Vaults share a similar goal to traditional funds — providing users with a simpler way to deploy capital more effectively and efficiently, but with automated and programmable code instead of intermediaries,” Morpho states on its website.
Posting on X on the same day, the Morpho team said the development with Bitwise is “an important step for Morpho’s infrastructure positioning.”
“Excited to see the vault curation model continue to scale, with the largest financial institutions in the world leaning in,” Morpho co-founder and CEO Paul Frambot said on X.
The Bitwise announcement wasn’t the only key development for Morpho this week, after it announced that its curated vaults from Sentora had been integrated with Kraken’s DeFi earn program.
Morpho saw a strong end to 2025
Morpho is the seventh-largest DeFi platform in total value locked (TVL) with $6.7 billion, according to data from DeFiLlama.
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Last year, the platform began 2025 with around $3.2 billion in TVL, rising to around $4 billion by the end of January on the back of a partnership with Coinbase to launch Bitcoin-backed loans.
Morpho’s TVL then fell to around $2.5 billion by April amid an attempted exploit on the protocol that was halted before any funds were lost.
From there, however, platform adoption exploded, surging to as high as $8.5 billion in November, following partnerships with Crypto.com and Société Générale’s digital-asset subsidiary SG-FORGE in September and October.
While it has surged up the ranks over the past 12 months, it still has a long way to go before it can catch competing lending platform and industry leader Aave, which has a TVL of more than $34 billion.
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