#United States #San Francisco #Bitwise #RWA Vault #Arc blockchain

Bitwise Premium RWA Vault (PAPY) Expands to Arc with USDC Deposits

On September 16, 2026, Bitwise Asset Management, a renowned player in the crypto asset management sphere, announced the exciting expansion of its Premium RWA Vault (PAPY) to the Arc blockchain. This launch is part of Arc's public mainnet introduction, showcasing Bitwise's commitment to innovating within the financial sector through the integration of real-world assets (RWAs).

The PAPY-USDC vault on Arc is designed to accept deposits in USDC, a stablecoin, which are then utilized to offer overcollateralized loans against tokenized RWAs. With a targeted annual percentage yield (APY) of 5-6%, this vault presents an attractive opportunity for investors, especially considering its recent success on Ethereum, where the inaugural PAPY-AUSD vault attracted over $20 million in deposits shortly after its launch.

How the PAPY Vault Operates

Depositors can contribute USDC into the PAPY-USDC vault through the Morpho protocol. The USDC is subsequently loaned out to borrowers who supply approved RWA collateral, each paying a variable interest rate determined by algorithms. One of the significant features of the PAPY model is its emphasis on curation, where Bitwise meticulously defines aspects such as acceptable collateral types, loan-to-value ratios, and interest rate configurations —without managing or holding the users' funds directly.

Types of Accepted Collateral

• - Huma Finance’s PST: This mechanism focuses on short-duration, cross-border payment financing, and has maintained zero historical defaults across $17 billion in transactions. Loans here range from one to seven-day terms.
• - USDai: This collateral structure is backed by GPUs that support AI infrastructure. The loans are safeguarded by a special purpose vehicle (SPV) that is monitored independently, ensuring rigorous oversight.

Excess liquidity accessed through these loans is directed toward lending markets supported by cirBTC, diversifying potential revenue streams and risk factors.

The Significance of USDC

USDC is a reliable, regulated stablecoin, boasting a market capitalization exceeding $74 billion as of mid-September 2026. It is fully backed by liquid reserves, ensuring stability and trust, crucial for confidence in any investment vehicle --especially in the volatile world of cryptocurrencies.

Why Choose Arc Blockchain?

The Arc blockchain is strategically designed to facilitate stablecoin payments, foreign exchange, and tokenized assets. Utilizing USDC as its base token allows for quick transaction finality, making it a suitable ecosystem for PAPY, particularly as it deals with real-world credit. Unlike many lending solutions in the crypto space that are tethered to market fluctuations, PAPY's methodologies aim to provide a more resilient yield structure through traditional financial mechanisms.

Transitioning Traditional Finance into the Crypto Space

In a statement, Jon Man, a Portfolio Manager at Bitwise, affirmed, "Our long-term view is that most on-chain credit will eventually be backed by real-world assets. Getting there means meeting institutional capital where it lives." He highlighted that the Arc framework, built around stablecoin transactions, aligns perfectly with this vision.

This approach not only enriches the DeFi landscape but also opens the doors to a broader range of investment strategies previously unavailable in blockchain technology, as complemented by Morpho's open lending network.

Expanding Opportunities in DeFi

The launch of the PAPY vault is a step towards democratizing access to yields derived from RWAs. According to Merlin Egalite, Co-Founder of Morpho, Bitwise adds a layer of expertise that allows users varied pathways to engage with real-world assets in innovative ways. As more institutional capital integrates into on-chain finance, platforms like PAPY are set to be at the forefront of this evolution, creating bridges between traditional and digital finance.

For more details on the PAPY-USDC vault, interested parties can visit Bitwise's official website. For more on Arc, go to Arc.io. Bitwise Asset Management, with its extensive history and robust asset base of $9 billion, remains a significant player in providing diverse investment products and strategies in the cryptocurrency sector.

Conclusion

The advent of the Bitwise Premium RWA Vault on the Arc blockchain is a transformative step towards integrating traditional financial assets with decentralized finance. As this trend grows, it could redefine yield generation and investment access in the evolving digital landscape.