Bitwise Launches PAPY Vault for Yield Generation on Morpho

Bitwise Asset Management has launched the Bitwise Premium RWA Vault, known as PAPY, which allows depositors to earn yield by lending stablecoins against tokenized real-world assets. The vault, which went live on September 2, is built on the Morpho lending protocol on Ethereum and has a capacity ceiling of $1 billion.

Depositors can contribute using Agora's AUSD stablecoin, which is fully backed by US Treasuries and managed by VanEck, with State Street acting as custodian. The vault aims for an annual percentage yield (APY) between 5% and 6%, although initial performance data indicated a modest APY of 1.35% on launch day, with approximately $638,633 in AUSD deposits.

PAPY operates as a non-custodial ERC-4626 vault, meaning there is no lock-up period for deposits. The vault's collateral is primarily allocated to Huma Finance's PST token, which represents real-world payment and credit flows, along with allocations to Hastra's PRIME and sUSDai. Bitwise charges a management fee of 0.39% without any performance fee.

This launch marks a significant step in Bitwise's decentralized finance (DeFi) strategy, moving from stablecoin lending to utilizing tokenized representations of off-chain assets. The success of PAPY will depend on the credit quality of its underlying borrowers, particularly given the high concentration of collateral in Huma Finance's PST.

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Source: KLEA News