Bitwise Asset Management just opened a new vault that lets depositors earn yield by lending stablecoins against tokenized real-world assets, and it comes with a billion-dollar appetite. The Bitwise Premium RWA Vault, ticker PAPY, went live on September 2 using the Morpho lending protocol on Ethereum, marking the asset manager’s latest push into on-chain yield products designed for institutional tastes.
The vault accepts deposits in Agora’s AUSD stablecoin, a dollar-pegged token fully reserved in US Treasuries, managed by VanEck with State Street serving as custodian. Those deposits are then programmatically lent against a diversified basket of over-collateralized tokenized real-world assets to generate variable returns.
Inside the vault mechanics
PAPY is built as a non-custodial ERC-4626 vault, which is Ethereum’s standardized interface for tokenized yield-bearing positions. No lock-up period is required.
The target annual percentage yield sits between 5% and 6%, though early performance tells a more modest story. As of launch day, on-chain data showed roughly $638,633 in AUSD deposits, with an instant net APY of 1.35% and a 7-day APY of just 1.01%.
The vault’s total capacity is approximately $1B. On the fee side, Bitwise is charging a management fee of 0.39% with no performance fee layered on top.
What’s backing the yield
Approximately 74.1% of the vault’s collateral is allocated to Huma Finance’s PST, a tokenized representation of real-world payment and credit flows. Another 14.1% goes to Hastra’s PRIME, while the remaining 11.8% sits in sUSDai.
Bitwise’s evolving DeFi strategy
The firm first entered vault curation back in January 2026 with products focused on stablecoin lending. PAPY is a step up in complexity: instead of lending stablecoins against crypto collateral, the vault lends against tokenized representations of off-chain assets, trading smart contract risk and liquidation risk for credit risk and counterparty risk associated with the underlying real-world borrowers.
The choice of AUSD as the deposit token reinforces this institutional framing. By using a stablecoin backed by US Treasuries and custodied by State Street, Bitwise is wrapping a DeFi yield product in institutional-grade infrastructure.
Competitive landscape and what to watch
Bitwise’s entry features a 0.39% management fee with no performance fee and no lock-up. At $638K in deposits on day one, the vault is utilizing roughly 0.06% of its stated capacity.
The early APY numbers deserve scrutiny. A 1.35% instant APY against a 5-6% target means the vault’s lending allocation strategy needs to ramp significantly as deposits grow and capital gets deployed more efficiently across its collateral markets.
The vault’s heavy concentration in Huma Finance’s PST at 74.1% means that the credit quality and operational reliability of Huma’s underlying borrowers will largely determine whether PAPY delivers on its yield promises.