The Kraken crypto exchange has announced the release of its new token—Kraken Wrapped Bitcoin (kBTC). This token is backed 1:1 by Bitcoin held at Kraken Financial.

Introduction to kBTC

According to the press release on Oct. 17, each kBTC is backed 1:1 by Bitcoin held at Kraken Financial, a Wyoming-chartered financial institution. The token is built on the ERC-20 standard and designed to operate on both the Ethereum network and OP Mainnet.

Benefits and Usability

Kraken explained: “With kBTC, we’re bringing the power of Bitcoin to new networks, underpinned by the trust and security expertise Kraken has established over the last decade.”

The wrapped Bitcoin will allow users to use their Bitcoin in decentralized apps (DApps) that normally don’t support Bitcoin. Kraken has also taken steps to ensure transparency by making on-chain data available for public inspection. Users can check the kBTC reserves by viewing the custody address and smart contracts for both Ethereum and OP Mainnet.

Technical Details and Future Plans

Kraken hired Trail of Bits to audit the smart contract, and the token successfully passed all tests. Wrapped tokens like kBTC allow assets to be used across multiple blockchains, improving interoperability in decentralized finance (DeFi). For example, kBTC can be used on Ethereum to trade, lend, or borrow Bitcoin on various DeFi platforms. At the time of launch, Kraken won’t support any spot markets for kBTC, but users will be able to redeem the token for actual Bitcoin at any time. kBTC will be integrated into major DeFi platforms such as Yearn, Curve, Paraswap, and others. Additionally, Kraken set the minimum deposit for kBTC at 0.00026 BTC, which is approximately $15 at current prices.

Kraken continues to expand its involvement in decentralized finance with the launch of kBTC, enhancing Bitcoin's interoperability with Ethereum and other blockchains.