Kraken Launches Native BTC Staking With 1% APY

Kraken, a prominent cryptocurrency exchange, has introduced a new feature that allows users to earn rewards on their Bitcoin holdings through native BTC staking. This initiative, in partnership with the decentralized finance (DeFi) protocol Babylon, offers an annual percentage yield (APY) of up to 1%. The new staking feature enables users to stake their Bitcoin without the need for wrapping, bridging, or lending processes, ensuring that users maintain full control over their assets.

This service is available to users in several regions, including the United States (excluding certain states), the United Kingdom, Australia, and the United Arab Emirates. The staking process is designed to be secure and straightforward, allowing users to earn passive income on their Bitcoin holdings. Kraken's native BTC staking involves time-locking the staked BTC to support Babylon-enabled proof-of-stake (PoS) blockchains. In return, users receive staking rewards in the form of Babylon’s native token, $BABY.

Unlike traditional staking methods, Kraken does not transfer Bitcoin into its own blockchain. Instead, the BTC is stored in a vault under smart contracts, which are then used to finance PoS chains through the Babylon protocol. This approach ensures the security and transparency of the staked Bitcoin while contributing to the development of emerging blockchain networks.

Mark Greenberg, the CEO and Global Head of Consumer at Kraken, highlighted the significant amount of idle Bitcoin on the platform. He noted that this idle BTC represents a missed opportunity for users and the broader cryptocurrency market. The introduction of native BTC staking allows users to earn rewards by supporting new blockchain networks, thereby maximizing the utility of their Bitcoin holdings.

Clayton Menzel, the Head of Business Development at Babylon Labs, emphasized that this integration demonstrates the global scalability of staking Bitcoin. He pointed out that Kraken's approach eliminates the risks associated with bridges or wrapped tokens, enabling users to make trust-minimized stakes without compromising the security advantages of Bitcoin.

The key advantage of this staking method is its transparency and safety. Rewards are managed using on-chain logic, which can be verified by anyone. Additionally, cryptographic tools are employed to prevent and punish malicious activities on the network. Users have the flexibility to initiate or stop staking at any time, with their funds becoming available for withdrawal after a 7-day unbonding period.

Kraken handles all technical aspects of the staking process, allowing users to focus on their investments without worrying about the complexities of bonding, choosing networks, or monitoring rewards. This user-friendly approach is particularly beneficial for new participants who may not be familiar with the intricacies of staking dynamics.

This development marks another significant step for Kraken in expanding its staking options. The exchange was an early pioneer in custodial staking when it introduced the feature in 2019. By offering native Bitcoin staking through Babylon, Kraken continues to provide users with more opportunities to earn crypto rewards while maintaining the security of their assets.

Overall, Kraken's native Bitcoin staking via Babylon represents a significant advancement in crypto services. It enables users to generate a 1% APY while actively participating in the staking process for future PoS ecosystems. The combination of easy access, high-security standards, and complete control over their assets allows Kraken users to explore a more efficient way to utilize their Bitcoin holdings.