Kraken Introduces Bitcoin Staking via Babylon
Crypto exchange Kraken has recently launched a new feature that allows users to stake Bitcoin (BTC) through an integration with Babylon. This development marks a significant step as decentralized finance (DeFi) on Bitcoin continues to gain traction.
Understanding Bitcoin Staking with Babylon
Babylon is a Bitcoin-native protocol designed to enable BTC to secure proof-of-stake (PoS) networks without requiring the cryptocurrency to leave the blockchain. This integration with Kraken allows users to stake their Bitcoin directly, securely locking it in a custodial vault on the native chain.
Once staked, the Bitcoin is delegated to PoS networks via Babylon. Users then receive rewards in BABY, the token associated with Babylon Genesis, a bitcoin-secured Layer 1 network. This initiative by Kraken is strategically aimed at expanding Bitcoin’s utility beyond its traditional roles as a store of value and a medium of exchange.
The Rise of Bitcoin DeFi
With the introduction of novel security-sharing protocols, Bitcoin staking is fast becoming a third native use case for the world’s largest cryptocurrency. Binance Research highlighted this evolution in a report from March, noting that the Bitcoin network is “evolving into a broader decentralized finance ecosystem with the emergence of Bitcoin DeFi.”
Despite its potential, only approximately 0.8% of the total Bitcoin supply is currently used in DeFi, leaving a substantial “untapped opportunity,” according to the report. Interestingly, Binance, a rival crypto exchange to Kraken, also offers a Bitcoin staking option through Babylon.
Kraken’s Commitment to Innovation
Mark Greenberg, Kraken’s Global Head of Consumer, emphasized the benefits of this launch: “With this launch, clients can earn a return on their BTC while also enabling emerging PoS blockchains to benefit from the economic weight of bitcoin in order to validate transactions and bolster the security of their networks.”
The staking process is fully on-chain, governed by Bitcoin scripts and safeguarded by cryptographic measures to prevent malicious activities. Users also have the flexibility to unstake their Bitcoin at any time, subject to a roughly 7-day unbonding period.
Expanding Access to Bitcoin Staking
Kraken first ventured into custodial staking back in 2019. With the introduction of Bitcoin staking, this feature is now available across all Kraken platforms, enhancing the exchange’s offerings and providing users with more opportunities to participate in the evolving DeFi landscape.
Read more: Kraken Unveils White-Glove Prime Brokerage Service for Crypto Institutions
