PAPY-USDC earns yield by lending stablecoin deposits against overcollateralized tokenized real-world assets (RWAs), and is available today as part of Arc's public mainnet launch.

SAN FRANCISCO, Sept. 16, 2026 /PRNewswire/ -- Bitwise Asset Management, a global crypto asset manager with $9 billion in client assets, today announced the expansion of the Bitwise Premium RWA Vault (PAPY) to the Arc blockchain as part of the network's public mainnet launch.

The PAPY-USDC vault on Arc accepts USDC to make overcollateralized loans against tokenized real-world assets (RWAs), with a target of 5-6% APY. It arrives two weeks after the launch of the inaugural PAPY-AUSD vault on Ethereum, which has since taken in more than $20 million in deposits (as of September 15, 2026). By lending against real-world credit, PAPY aims to deliver yield that is more durable and less correlated with crypto markets than most onchain lending offers today. 

How PAPY works on Arc. Lenders deposit USDC into the PAPY-USDC vault on the Morpho protocol. Those deposits are then lent to borrowers who post white-listed RWA collateral and pay an algorithmically derived, variable interest rate. For PAPY vaults, Bitwise's curation involves predetermining the vault's parameters and precalibrating its models—including acceptable collateral, loan-to-value ratios, and interest-rate configuration—without taking custody of or exercising discretionary management over user assets.

The collateral accepted for PAPY-USDC includes:

  • Huma Finance's PST: Short-duration cross-border payment financing. Loans are made to licensed financial institutions on one- to seven-day terms, with zero historical defaults across $17 billion in transaction volume.

     
  • USDai: Loans backed by GPUs powering AI infrastructure. The collateral sits in a bankruptcy-remote SPV with a first-priority lien, is independently monitored, and loans self-liquidate; its value is warranted and reinsured via a Munich Re subsidiary.

Excess liquidity is allocated to lending markets backed by cirBTC.

USDC, the deposit asset. Deposits are made in USDC,1 a stablecoin issued by regulated entities of Circle, with a market cap of more than $74 billion as of September 15, 2026. USDC is fully backed by cash and short-dated U.S. Treasuries, held in reserve at regulated financial institutions.

Note: All descriptions and figures above are as stated by the provider.

Why Arc? Arc is purpose-built for stablecoin payments, foreign exchange, and tokenized assets. It uses USDC as its native gas token and settles with sub-second finality. For a vault that lends against real-world credit like PAPY-USDC, Arc's combination of institutional validators, stablecoin-native settlement, and a network designed around tokenized assets presents an optimal growth environment.

Why RWAs? Most onchain yield today comes from two crowded models: commoditized bitcoin-backed lending or crypto-native yield farming. PAPY offers a more durable approach. Loans secured by RWAs tap deeper traditional-finance credit markets, so the interest borrowers pay isn't tied to crypto cycles or onchain liquidity.

"Our long-term view is that most onchain credit will eventually be backed by real-world assets," said Jonathan Man, Portfolio Manager at Bitwise. "Getting there means meeting institutional capital where it lives. Arc is purpose-built for stablecoin settlement and tokenized assets, and its validator set is institutional from top to bottom. We're making vault curation a core part of what Bitwise does, and every PAPY vault brings more real-world credit onchain."

"We're excited to have Bitwise curating on Morpho and launching their first vault on Arc," said Merlin Egalite, Co-Founder of Morpho. "Morpho supports a rich set of RWAs and what Bitwise adds is the expertise to combine them into a single diversified strategy, giving users new curated ways to access real-world yield. This is how the Morpho network expands DeFi into new risk profiles and strategies that weren't possible before."

As more of the world's capital moves onchain, Bitwise expects real-world assets to lead the way — and PAPY is designed to give lenders access to that trend through transparent, programmatic lending infrastructure. It's the newest way Bitwise is connecting traditional finance and onchain markets, from ETFs and staking to tokenized portfolios and vault curation.

For more information about PAPY-USDC, visit https://onchain.bitwiseinvestments.com/vaults/papy-usdc.

For more information about Arc, visit Arc.io 

About Bitwise 

Bitwise Asset Management is a global crypto-focused asset manager with $9 billion in client assets and a suite of over 70 investment products spanning ETFs, separately managed accounts, private funds, hedge fund strategies, and staking. The firm has a nine-year track record and today serves more than 5,500 private wealth teams, RIAs, family offices, and institutional investors, as well as 21 banks and broker-dealers. The Bitwise team of technology and investment professionals is backed by leading institutional investors and has offices in San Francisco, New York, and London.

About Arc 

Arc is a purpose-built, EVM-compatible Layer-1 blockchain advancing the frontier of stablecoin finance and tokenization. It features USDC as native gas, deterministic settlement finality, opt-in privacy, and a stable transaction fee architecture. Optimized for stablecoin-native use cases, such as global payments, FX, and capital markets, Arc serves as a foundational settlement layer for programmable money on the internet.

About Morpho

Morpho is an open lending network with $13B+ in deposits connecting lenders and borrowers to the optimal opportunities worldwide. Its modular, open infrastructure enables fintechs, wallets, exchanges, and institutions to embed configurable credit products directly into their platforms, while maintaining full control over the user experience. Leaders like Coinbase, Robinhood, Bitwise, and Société Générale already build on Morpho to deploy secure, scalable onchain credit products. For more information, please visit Morpho.org.

Risks and Important Information

This vault is a technology-mediated lending protocol in which users supply USDC to a lending pool and earn variable interest paid by borrowers. It is not a managed fund, investment product, or common enterprise. Yield is generated from algorithmically determined interest based on borrower demand and protocol utilization — not from the entrepreneurial or managerial efforts of Bitwise or any other person.

Vault Curation Services for this vault are provided by Bitwise Investment Manager, LLC ("BIM"). BIM is registered with the U.S. Securities and Exchange Commission ("SEC") as an investment adviser. That registration relates to BIM's separately conducted advisory business. BIM is not acting as an investment adviser, fiduciary, or in any advisory capacity in connection with this vault. The SEC has not approved or endorsed this vault or any vault product. No regulatory protections afforded to BIM's investment advisory clients extend to vault users. No advisory, fiduciary, trust, or client relationship is created between BIM and any vault user.

Custody of assets deposited into the vault is maintained through user-controlled wallets and the onchain smart contract infrastructure of the Morpho protocol. Bitwise does not custody user assets.

Risk factors

Participation in DeFi lending carries material risks, including the risk of total loss of deposited assets. Risk factors include, but are not limited to:

  • Smart-contract risk. This vault relies on smart-contract code that may contain bugs, vulnerabilities, or exploitable weaknesses. A smart-contract exploit could result in partial or total loss of all deposited assets. Smart-contract audits are available at https://docs.morpho.org/get-started/resources/audits.
  • Collateral and credit risk. If borrower collateral values decline rapidly, liquidation proceeds may be insufficient to cover outstanding loans, resulting in bad debt allocated to depositors. The quality, liquidity, and volatility of accepted collateral types directly affects the risk profile of this vault.
  • RWA-specific risk. Tokenized real-world assets carry credit, structural, and provider-specific risks, including valuation risk, custodial risk, legal and enforcement risk, and redemption risk. The collateral characteristics, default history, insurance arrangements, and structural features described above are as represented by the respective third-party providers; Bitwise has not independently verified this information and makes no representation or warranty regarding its accuracy or completeness.
  • Liquidity risk. Withdrawal is subject to available liquidity in the underlying lending pool. If utilization is high, withdrawal may be delayed or temporarily unavailable.
  • Oracle risk. The lending protocol relies on price oracles. Oracle failure, manipulation, or stale data could result in improper liquidations or failure to liquidate undercollateralized positions.
  • Regulatory risk. The regulatory classification of DeFi lending protocols, vault interests, and digital assets is uncertain and evolving. Regulatory action may restrict, prohibit, or alter the availability or structure of this vault.
  • Protocol risk. The underlying Morpho protocol is operated by third parties. Bitwise does not control the operation, security, governance, or solvency of the protocol.
  • Variable yield. Yields are variable, not guaranteed, and may be zero.
  • No insurance. This vault is not insured by the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), or any other governmental or private insurance program. You may lose some or all of your deposited assets.

Certain information in this press release, including collateral characteristics, historical performance, default history, insurance arrangements, and structural features, is based on or derived from information provided by independent third-party sources, including the providers of the RWA collateral described above. Bitwise believes these sources are reliable but has not independently verified the accuracy or completeness of such information or the assumptions on which it is based.

Target APY of 5–6% is a current estimate based on prevailing borrower demand and market utilization as of the date of this press release. APY is variable, determined algorithmically by the protocol's utilization-based interest-rate model, is not fixed, is not guaranteed, and may change at any time without notice. Actual yields may be materially higher or lower than the target, including zero. Past rates are not indicative of future rates.

This press release is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments in any jurisdiction. Nothing in this press release constitutes investment, financial, legal, or tax advice. You should consult your own advisors before participating.

Use of this vault is governed by the Bitwise Onchain Terms of Use, including Schedule A: Lending Vault Terms, available at https://onchain.bitwiseinvestments.com/tos.

Disclaimers:

Arc is an open L1 blockchain launched by Arc Network Services LLC ("Arc LLC") and operated by a permissioned validator set. Arc LLC provides software services only and does not offer regulated financial or advisory services. Arc has not been reviewed or approved by the New York State Department of Financial Services or any other regulatory authority.

The Arc network is provided "as is" and "as available." Use of Arc involves inherent risks associated with blockchain technology, including smart contract vulnerabilities, network disruptions, and the absence of recourse for transaction errors or losses. The ability to transact on Arc depends on the ability to obtain and use USDC to pay gas fees. Neither Arc LLC nor any permissioned validator is responsible for the content, accuracy, legality, or functionality of third-party applications, protocols, or services built on or integrated with Arc. You are solely responsible for features or services you provide to users, including obtaining any necessary licenses or approvals and otherwise complying with applicable laws.

All Arc features may be modified, delayed, or cancelled at any time without notice. Nothing herein constitutes a commitment, warranty, guarantee or legal, regulatory, tax, or investment advice.

1 USDC is issued by regulated affiliates of Circle. See Circle's list of regulatory authorizations.

Stephanie Dressler - pr@bitwiseinvestments.com

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SOURCE Bitwise Asset Management