Morpho Protocol Powers Bitwise's New On-Chain Vault Initiative
Digital asset manager Bitwise collaborates with Morpho protocol to introduce institutional DeFi yield vaults using carefully selected on-chain lending approaches.
Bitwise, a digital asset management company, has formed a partnership with Morpho, a decentralized finance (DeFi) lending protocol, to introduce non-custodial vaults on-chain designed for yield generation purposes.
The partnership was revealed through an X post on Monday, where Bitwise indicated that the initial vault offering is designed to achieve a 6% annual percentage yield through investments in lending pools that are overcollateralized.
Finance is moving onchain. Vaults are a key part of that, offering investors a transparent way to earn digital yield on their assets.
Bitwise
Bitwise's onchain vaults via Morpho
Multiple strategies across vaults on Morpho will be deployed by Bitwise, with Jonathan Man, who serves as Bitwise's portfolio manager and head of multi-strategy solutions, spearheading the firm's "curation, strategy, and risk management" efforts.
Onchain vaults to double AUM in 2026: Bitwise
This partnership arrives approximately one month following Bitwise's projection that on-chain vaults, which the firm characterized as "ETFs 2.0," are expected to see their assets under management double during 2026.
Within the report, Bitwise drew comparisons between vaults and "onchain investment funds," clarifying that users have the ability to simply deposit assets into a vault, after which a third party assumes management responsibilities for the assets and employs them to generate yield throughout decentralized finance platforms.
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
A crucial element of the onchain vaults is the flexibility they provide users to deposit or withdraw their funds whenever they choose, contrasting with certain staking protocols where funds remain locked. From the curator perspective, revenue is generated through 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
In an X post published the same day, the Morpho team characterized the Bitwise development as "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.
Paul Frambot, Morpho co-founder and CEO
The announcement from Bitwise represented just one of several significant developments for Morpho during the week, as the platform also revealed that Sentora's curated vaults had been incorporated into Kraken's DeFi earn program.
Morpho saw a strong end to 2025
With $6.7 billion in total value locked (TVL), Morpho ranks as the seventh-largest DeFi platform, based on data provided by DeFiLlama.
The platform kicked off 2025 with approximately $3.2 billion in TVL, climbing to roughly $4 billion by January's conclusion, boosted by a Coinbase partnership focused on launching Bitcoin-backed loans.
By April, Morpho's TVL had declined to approximately $2.5 billion following an attempted exploit targeting the protocol, though the attack was successfully prevented before any funds could be compromised.
Following that incident, however, the platform experienced explosive growth in adoption, skyrocketing to a peak of $8.5 billion in November, fueled by partnerships established with Crypto.com and SG-FORGE, the digital-asset subsidiary of Société Générale, during September and October.
Despite climbing significantly in rankings throughout the previous 12 months, the platform still faces considerable ground to cover before potentially overtaking Aave, the competing lending platform and industry leader, which maintains a TVL exceeding $34 billion.