Kraken Ignites Bitcoin Staking Boom
Kraken has teamed up with Babylon, a protocol designed to unlock yield without moving Bitcoin from its original blockchain, to launch native Bitcoin staking. This is a major step forward that could change Bitcoin’s role in decentralized finance. The Babylon protocol isn’t just another service for staking. It is the first time that people can stake Bitcoin in a proof-of-stake network while keeping its native status and safety.
Bitcoin is a proof-of-work asset, which means it can’t be used in staking protocols like Ethereum or Solana. Now that is different. Users can stake their idle Bitcoin directly with Kraken and get BABY tokens, which are Babylon’s native currency. These tokens will be sent out every week after a seven-day unbonding period.
Users don’t have to wrap or bridge their Bitcoin. It stays where it is, safe on the Bitcoin chain, while also helping to keep Babylon’s Layer 1 network and other proof-of-stake networks safe. Babylon Labs created a new cryptographic script that makes sure that user custody is never compromised. Babylon’s proof mechanisms check security contributions and let users take their Bitcoin out at any time after the unbonding period.
What Kraken Does and How It Fits into the Bigger DeFi Picture
The process is going smoothly thanks to Kraken. You just need to put Bitcoin into a Kraken wallet and then choose to stake. Once the user is active, they start getting BABY token rewards. In the beginning, the annual percentage returns are expected to be around one percent. It’s a low-risk way to use up old Bitcoin holdings while helping newer chains grow by using Bitcoin’s liquidity and trust.
Kraken’s announcement comes at a time when less than one percent of Bitcoin is currently being used in DeFi, leaving billions of dollars sitting around. Other big platforms are already starting to use the move. Binance has also added staking powered by Babylon, which means that more people will be using it soon.
Mark Greenberg, Kraken’s Global Head of Consumer, says, “A substantial amount of Bitcoin currently sits idle on our exchange.” He added, “ It represents a significant opportunity cost for clients and a missed opportunity for the broader ecosystem.”
Kraken’s staking service might soon be the model for Bitcoin DeFi. It lets users keep their custody, stay native, and still make money without doing anything. This isn’t just new ideas; it’s a whole new way of doing things. Bitcoin, the safest and most liquid digital asset, is finally getting proof-of-stake rewards without losing what makes it so powerful in the first place.
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