Crypto exchange Kraken has launched a Bitcoin staking feature by integrating with the Babylon protocol, allowing users to earn on their BTC.
How Bitcoin Staking Works
Kraken users can stake their Bitcoin, which is then delegated via Babylon to secure Proof-of-Stake networks. Rewards are paid out weekly in BABY tokens. The Bitcoin remains on the Bitcoin blockchain, while reward management is done via verifiable smart contracts.
Users can stake their Bitcoin instantly, but withdrawing triggers a seven-day unbonding period during which no rewards are accrued. This feature is currently available only in select countries including the USA, UK, Australia, and UAE.
Benefits and Risks of Staking
According to Kraken's Head of Consumer Mark Greenberg, "a significant amount of Bitcoin currently sits idle on our exchange, representing a missed opportunity for clients and the broader ecosystem." The main advantages include earning on inactive funds.
However, participants must also consider risks such as reward token volatility and potential centralized control, which makes the system less secure than traditional staking models.
Kraken's Expanding Offerings
Kraken is actively expanding its offerings, having recently developed its own Ethereum Layer 2 blockchain called Ink and announced commission-free stock trading services. The exchange also plans to launch tokenized stock trading for companies like Apple and Nvidia. In March, Kraken agreed to acquire NinjaTrader for $1.5 billion, marking the largest deal in the crypto space.
The launch of Bitcoin staking on Kraken opens new opportunities for users to earn on their assets, though it is essential to consider the associated risks.
