Crypto exchange Kraken has launched a new Bitcoin staking product through a protocol integration with Babylon Labs.
In a Thursday announcement, Kraken said it has partnered with the Bitcoin (BTC) staking protocol Babylon. The integration allows the exchange’s users to earn interest on their Bitcoin holdings without the need for bridging, wrapping or lending.
Kraken customers can use the service starting today by staking their Bitcoin without interacting with off-exchange wallets. The Bitcoin is locked in a vault on the Bitcoin blockchain and delegated to secure proof-of-stake (PoS) networks through the Babylon protocol.
The rewards are not paid in Bitcoin; users earn Babylon’s BABY token. The BABY price has increased by nearly 5% since the announcement, according to CoinMarketCap.
Related: Babylon total value locked drops 32% as wallets unstake $1.2B in Bitcoin
Bitcoin staking in the search for utility
Mark Greenberg, global head of consumer at Kraken, said that “a substantial amount of Bitcoin currently sits idle on our exchange.” According to him, this idle asset represents “a significant opportunity cost for clients and a missed opportunity for the broader ecosystem.”
Through the Babylon integration, Greenberg said clients can now earn a return on their Bitcoin. He also highlighted how this has the added benefit of “enabling emerging PoS blockchains to benefit from the economic weight of Bitcoin to validate transactions and bolster the security of their networks.”
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