Kraken reports to have rolled out Bitcoin staking via a partnership with Babylon Labs. Users can now stake their BTC directly staking here which doesn’t require wrapping, lending, or bridging. This is a large step forward in the world of Bitcoin based finance also known as BTCFi.
Through the lens of Babylon’s protocol, which is the framework here, what happens is that Bitcoin stays put in the Bitcoin blockchain but at the same time is made available for use in proof of stake networks. Full transparency of this process through the use of on chain Bitcoin scripts. In the Kraken platform, you’ll find kraken bitcoin staking under their “Bonded Staking” program.
There is no min requirement. As long as users have some BTC in their Kraken account and live in an eligible region they may participate. At present staking is supported in the U.K., UAE, Australia and most U.S. states.
Kraken’s Bitcoin Staking Program Issues BABY Tokens
Unlike traditional crypto staking, Kraken Bitcoin staking gives out the BABY token. This new token is the fuel for the Babylon Genesis chain and also works with gas fees, governance and dual staking. Bitcoin staking through Kraken involves intriguing rewards like BABY tokens.
Users are given out daily rewards which are then put into their Kraken wallet weekly. APR fluctuates between 0.5% to 1%. Also there is a 7 day unbonding period which has the user’s BTC locked and not transferable.
Since the announcement of Kraken, BABY’s price has gone up by almost 5%. Analysts are very positive and predict a jump from $0.068 to $0.21 by late June. There is risk especially in the reduction of penalties for validator misbehavior but also that services like Nexus Mutual are offering solutions for that.
BTCFi Expansion
Kraken Bitcoin staking supports the growth of BTCFi which is in turn the rising segment of decentralized finance that we see on the Bitcoin network. BTCFi which enables lending, staking, and interaction with smart contracts all within the Bitcoin system itself.
Babylon’s platform has implemented Bitcoin Supercharged Networks (BSNs) which in turn allows BTC to secure external PoS chains. At present over 57,000 BTC is staked on Babylon Genesis which is worth $5.6 billion.
This integration benefits present users of Bitcoin and also in new PoS chains. Bitcoin gains a new use, while PoS chains gain in terms of Bitcoin backed trust. Kraken’s decision may be the connection between Bitcoin’s past and DeFi’s future, consolidated through kraken bitcoin staking.
