Crypto-native vaults could do to asset management what exchange-traded funds (ETFs) did over the past three decades, eventually replacing traditional fund wrappers over time as traditional assets move onchain.
The thesis is driving strategy at asset manager Bitwise. With $15bn in assets under management, the company sees vaults as the next major shift in how investment products are built and distributed.
"Eventually all asset management will be done through vaults," Bitwise chief investment officer Matt Hougan said during the Digital Asset Summit on 26 Mar.
Vaults are one of the emerging examples of how programmable money can disrupt traditional finance. They package investment strategies directly into smart contracts, allowing allocation, execution and rebalancing to be automated onchain. The model removes layers typically handled by custodians, fund administrators and brokers, replacing them with programmable infrastructure.
But vault strategies are not new. Many vault products started as fragmented yield farming strategies and have evolved into risk management tools. Protocols such as Yearn Finance and Polygon's AggLayer have been offering automated yield and portfolio management to crypto-native users for some time.
What is changing is the entrance of traditional financial firms.
Small but growing
Crypto vaults are still small, with roughly $20bn in assets versus about $20tn in ETFs, according to Hougan, but their growth is increasingly tied to a bigger shift: institutional adoption and the tokenization of real-world assets.
Tokenized assets, including Treasuries, credit and funds, already exceed $26.6bn in value. Firms such as BlackRock and Franklin Templeton have launched tokenized funds, as traditional firms increasingly integrate blockchain into their infrastructure.
Testing the vault model
Bitwise has also jumped into the trend. In January, the company announced its first non-custodial vault on Morpho, a decentralized finance network that connects lenders and borrowers, targeting a 6% yield on stablecoins.
Morpho, launched in 2022, has seen its total value locked on its protocol double since 2024, to $7.1bn, according to DefiLlama. Last year, it collected more than $161mn from transaction fees.
For now, vaults remain a small slice of the market, constrained by liquidity and regulatory uncertainty. The question, Hougan suggested, is not whether the model works, but how quickly the surrounding infrastructure catches up. "Vaults are just the next phase of asset management… rebuilt onchain," he said.
