Bitwise's Premium RWA Vault, trading under the ticker PAPY, gathered over $8 million in deposits during its first day of operation on September 3, following its launch on the Morpho lending protocol on Ethereum the previous day. The vault began with initial deposits of $639,000 before rapidly scaling.
By September 3, total deposits had reached $8.022 million in AUSD, Agora's USD-pegged stablecoin. The vault offered an instantaneous net annual percentage yield of 5.22%, positioning it within its target range of 5–6%.
Vault Structure and Asset Allocation
PAPY operates as a non-custodial vault, meaning Bitwise manages the strategy without taking direct custody of user funds. Deposits are allocated to overcollateralized tokenized real-world assets with the following breakdown: 46.59% to Huma Finance's PST, 29.23% to Hastra PRIME, and 24.18% to sUSDai.
AUSD itself is backed by reserves managed by VanEck and custodied at State Street, with holdings in short-term US Treasuries and liquid assets. Bitwise sets vault parameters including eligible collateral types, loan-to-value ratios, and interest rate configurations.
The vault charges a flat management fee of 0.39% with no performance fee. Its capacity is capped at approximately $1 billion, with current deposits representing less than 1% of available headroom.
Market Context
Bitwise manages $9 billion in client assets across its broader business and has been developing on-chain infrastructure through its partnership with Morpho, which was announced in January. The 5–6% yield target differs from higher returns advertised elsewhere in DeFi, though these yields derive from real credit flows rather than token emissions or speculative leverage.
PAPY competes with similar products including BlackRock's BUIDL fund, Franklin Templeton's on-chain money market fund, and Ondo Finance's tokenized Treasury products. The flat-fee structure and overcollateralization requirement—which mandates borrowers post more collateral than they receive in loans—position the vault as a low-friction option designed to reduce default risk.
