Kraken Launches Bitcoin Staking With Babylon Labs

Crypto exchange Kraken has launched a new Bitcoin staking product through a protocol integration with Babylon Labs. In a Thursday announcement, Kraken said it has partnered with the Bitcoin (BTC) staking protocol Babylon to launch its new service. The integration allows the exchange’s users to earn interest on their Bitcoin holdings without the need for bridging, wrapping or lending it out. Kraken customers can use the new service starting today by staking their Bitcoin without interacting with off-exchange wallets. The Bitcoin is locked in a vault on the Bitcoin blockchain and delegated to secure proof-of-stake (PoS) networks through the Babylon protocol.

The rewards are not paid in Bitcoin; instead, users earn Babylon’s BABY token. Mark Greenberg, global head of consumer at Kraken, said that “a substantial amount of Bitcoin currently sits idle on our exchange.” According to him, this asset staying idle represents “a significant opportunity cost for clients and a missed opportunity for the broader ecosystem.” Through the Babylon integration, Greenberg said clients can now earn a return on their Bitcoin. He also highlighted how this has the added benefit of “enabling emerging PoS blockchains to benefit from the economic weight of Bitcoin to validate transactions and bolster the security of their networks.”

This development allows Kraken clients to earn passive rewards on their Bitcoin holdings without the need for bridging, wrapping, or lending out their assets. The integration leverages Babylon's native staking protocol, which supports Proof-of-Stake networks, marking a first for Kraken clients. The new staking service enables users to lock their Bitcoin in a custodial vault on the native chain, providing a secure and straightforward way to participate in staking. This move is significant as it eliminates the complexities traditionally associated with staking, such as the need for additional steps like bridging or wrapping tokens. By simplifying the process, Kraken aims to make Bitcoin staking more accessible to a broader range of users.

The integration with Babylon introduces a new opportunity for clients to earn passive income on their Bitcoin holdings. This is particularly noteworthy as it allows users to benefit from the growing trend of decentralized finance (DeFi) without the need for complex financial instruments. The staking service is designed to be user-friendly, ensuring that even those with limited technical knowledge can participate. Kraken's decision to launch Bitcoin staking through Babylon is a strategic move that aligns with the broader trend of integrating DeFi solutions into traditional cryptocurrency exchanges. By offering staking services, Kraken not only enhances the value proposition for its clients but also positions itself as a forward-thinking platform that embraces innovative financial technologies. This move is likely to attract more users to the platform, as it provides an additional way to generate passive income from their Bitcoin holdings.

The launch of Bitcoin staking through Babylon is a significant development for Kraken and its clients. It represents a step forward in the evolution of cryptocurrency exchanges, as they increasingly incorporate DeFi solutions to offer more diverse and attractive financial services. By providing a secure and user-friendly staking option, Kraken is likely to see increased engagement and satisfaction from its user base, further solidifying its position as a leading player in the cryptocurrency market.