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Kraken, one of the world’s leading cryptocurrency exchanges, has introduced Bitcoin staking through its integration with Babylon. This marks Kraken’s first offering that enables clients to earn yield on their Bitcoin holdings without transferring them off the Bitcoin blockchain. The move reflects a growing trend among institutions adopting innovative staking solutions to enhance the utility of Bitcoin.

How Kraken’s Bitcoin Staking Works

Kraken’s Bitcoin staking service leverages Babylon’s protocol, allowing users to delegate their Bitcoin to proof-of-stake (PoS) blockchains while maintaining full ownership of their assets. Unlike traditional staking methods that require wrapping or bridging Bitcoin to other networks, Kraken’s approach ensures that the underlying Bitcoin remains on the Bitcoin blockchain. This eliminates the risks associated with lending or rehypothecation.

Through Babylon’s smart contract-based delegation mechanism, staked Bitcoin contributes to securing PoS networks. In return, users earn rewards in Babylon’s native token, BABY. Key features of the service include:

  • A seven-day unbonding period for unstaking assets
  • Transparent reward tracking for users
  • Cryptographic penalties to discourage malicious actors

Unlocking Idle Bitcoin’s Potential

Mark Greenberg, Kraken’s Global Head of Consumer, emphasized the significance of this launch. “A substantial amount of Bitcoin currently sits idle on our exchange,” Greenberg stated. “This service allows clients to earn returns while supporting the infrastructure of emerging PoS blockchains.”

The initiative aligns with a broader industry trend to make Bitcoin more productive. Until now, less than 1% of Bitcoin’s total supply has been involved in decentralized finance (DeFi) due to the technical challenges and security risks of bridging Bitcoin to other chains. Kraken’s staking solution, powered by Babylon, addresses these issues by enabling trustless delegation directly from the Bitcoin blockchain to PoS networks.

Growing Institutional Adoption of Babylon

Kraken joins other major platforms like Binance and BitGo in adopting Babylon’s staking infrastructure. Since Babylon’s Genesis mainnet launch in April 2025, over 57,000 BTC—worth more than $5.6 billion—has been staked, signaling increasing institutional interest in Bitcoin-native DeFi protocols.

This development is significant for both investors and the broader crypto ecosystem. By reducing the complexity and risks traditionally associated with Bitcoin staking, Babylon’s approach broadens Bitcoin’s utility and encourages greater participation in decentralized finance.

Staking Rewards and Risks

Kraken’s Bitcoin staking service is now live across all platforms, including Kraken Pro. Users can earn up to 1% annual percentage rate (APR) in staking rewards, with payouts distributed weekly in BABY tokens. However, it’s important to note that staking involves inherent risks, including market fluctuations and potential penalties for network infractions.

Additionally, staking availability and rewards may vary based on regional restrictions and other factors. Investors are encouraged to assess their risk tolerance and conduct thorough research before participating in staking services.

As the cryptocurrency landscape continues to evolve, Kraken’s latest offering underscores the growing demand for innovative ways to enhance the use of Bitcoin within decentralized finance. For those holding idle Bitcoin, staking presents an opportunity to earn passive income while contributing to the security and functionality of PoS networks.

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