tl;dr
Kraken announced that U.S. users (excluding certain states), as well as users in the U.K., Australia, and the UAE, can now stake their Bitcoin on its platform and earn rewards in BABY tokens through the Babylon protocol. This allows customers to earn returns on idle BTC by using it as collateral to ...
Kraken has introduced Bitcoin staking through the Babylon protocol, enabling users in the U.S. (excluding California, Maine, Maryland, New Jersey, New York, Washington, and Wisconsin), the U.K., Australia, and the UAE to earn BABY token rewards by locking their BTC on the platform. This innovative feature allows customers to generate returns on idle Bitcoin by using it as collateral to support proof-of-stake (PoS) networks, despite BTC’s native proof-of-work (PoW) consensus mechanism.
The Babylon protocol, which raised funds last year to facilitate Bitcoin staking, allows Kraken customers to contribute to securing emerging PoS blockchain networks and earn BABY tokens as a reward. Mark Greenberg, Kraken’s Global Head of Consumer, highlighted the untapped potential of idle Bitcoin sitting on exchanges and expressed enthusiasm about providing clients with a way to earn returns while bolstering the security of PoS networks.
Staking traditionally involves pledging PoS coins like Ethereum or Solana to a network to help validate transactions and maintain network security, in exchange for rewards. Although Bitcoin operates on a PoW system, Babylon’s technology lets users leverage BTC as collateral to stake on PoS blockchains, bridging Bitcoin’s utility with newer consensus models.
Kraken’s latest offering comes amid favorable regulatory developments, with the U.S. Securities and Exchange Commission easing enforcement actions against the platform and others, enabling Kraken to expand services including the introduction of stocks and ETF trading in certain U.S. regions. This strategic addition highlights Kraken’s commitment to blending traditional financial products with crypto innovation.
Bitcoin’s price remained relatively stable around $104,300 during this announcement period. The integration of Babylon’s Bitcoin staking feature marks a significant step in expanding the utility of Bitcoin within the evolving DeFi ecosystem and offers users a new avenue to maximize their crypto assets' potential.