Bitwise Asset Administration has taken its Premium RWA Vault, higher generally known as PAPY, to Circle’s Arc blockchain. The vault now sits atop the yield rankings amongst Morpho vaults on the community, posting a internet APY of 4.79%.
How the PAPY-USDC vault works
The enlargement went stay on September 16, 2026, timed to coincide with Arc’s public mainnet launch. The brand new product, referred to as PAPY-USDC, runs on the Morpho lending protocol utilizing its Vault V2 structure.
Customers deposit USDC, and the vault lends that cash out to debtors who put up tokenized real-world belongings, or RWAs, as collateral. These loans are overcollateralized. Debtors have to lock up extra worth than they take out, which provides lenders a cushion if issues go sideways.
The collateral accepted contains Huma Finance’s PST and sUSDai. The vault may additionally allocate to cirBTC markets, including one other potential lending venue.
Bitwise acts because the curator however stays non-custodial. It by no means holds depositors’ funds immediately. As an alternative, it units the principles: which collateral qualifies, what loan-to-value ratios apply, and which interest-rate fashions the vault makes use of.
The numbers behind the vault
PAPY-USDC targets a variable APY of 5-6%. As of early October 2026, the vault reported a internet APY between 4.8% and 5.55%, with the Morpho app displaying 4.79%.
The price construction is gentle. Bitwise costs a administration price of roughly 0.39-0.4%, and there’s no efficiency price.
Deposits are nonetheless modest. In early October 2026, the vault held between $418K and $422K in USDC. The vault’s capability is capped at roughly $1B.
The vault follows the ERC-4626 customary and has no lock-up necessities. Depositors can withdraw when they need, topic to the vault’s out there liquidity.
A second act after Ethereum
Arc isn’t PAPY’s first cease. Bitwise launched a PAPY-AUSD vault on Ethereum on September 2, 2026. That model pulled in over $20 million in deposits inside two weeks.
The Arc model arrived simply two weeks after the Ethereum launch. The important thing distinction is the foreign money: Arc’s vault is constructed round USDC from day one.
Bitwise brings a longtime footprint to the trouble, with $9 billion in shopper belongings.
What this implies for DeFi lending and RWA yield
For Morpho, the enlargement reinforces its function as infrastructure that curators can deploy throughout a number of networks. Bitwise now runs PAPY on Morpho on each Ethereum and Arc.
The vault’s yields have been variable, starting from 4.8% to 5.55% in latest reporting, and typically falling wanting the 5-6% goal. Collateral high quality is the opposite key variable: overcollateralization presents safety, however the vault’s security finally depends upon how properly belongings like Huma’s PST and sUSDai maintain their worth and stay liquid.
