Kraken Exchange announced the launch of Kraken Wrapped Bitcoin (kBTC), a new ERC-20 token fully backed by Bitcoin held 1:1 in Kraken’s custody. This development allows Bitcoin to interact with decentralized finance (DeFi) protocols and applications.

Understanding kBTC: Key Features and Benefits

kBTC is a wrapped token representing Bitcoin on Ethereum and other ERC-20-compatible networks. It is backed 1:1 by actual Bitcoin held in Kraken’s secure custody, ensuring full collateralization and stability. By launching kBTC, Kraken aims to bring Bitcoin's liquidity and value into the DeFi ecosystem, enabling Bitcoin holders to interact with decentralized applications without needing to sell or exchange their BTC.

Why Kraken Launched kBTC

Kraken launched kBTC to address the need for integrating Bitcoin into decentralized financial ecosystems. While Bitcoin remains the most valuable and widely recognized cryptocurrency, its utility within DeFi has been limited due to the lack of native support for smart contracts. By wrapping Bitcoin in the form of kBTC, Kraken allows BTC holders to unlock the full potential of their assets, enabling them to participate in DeFi activities like lending and yield farming.

Use Cases for kBTC in the DeFi Ecosystem

kBTC can be used for trading on decentralized exchanges like Uniswap and SushiSwap. kBTC holders can earn rewards through yield farming and participate in lending and borrowing platforms such as Aave and Compound, using their Bitcoin as collateral to access other assets without needing to sell their BTC.

The launch of kBTC by Kraken Exchange marks a significant step forward in expanding the utility of Bitcoin within the DeFi ecosystem. With secure custody, regulatory compliance, and cross-network compatibility, kBTC offers a trusted and versatile solution for integrating Bitcoin into the world of decentralized finance.