Kraken, a leading cryptocurrency exchange, has announced the launch of Bitcoin (BTC) staking through an integration with the Babylon Bitcoin staking protocol. This new service allows Kraken users to earn passive rewards on their Bitcoin holdings without the need for bridging, wrapping, or lending out their BTC.

The integration with Babylon, a Bitcoin-native staking protocol, enables users to stake their Bitcoin directly from their Kraken accounts. The BTC is securely locked in a vault on the native Bitcoin chain and delegated to secure Proof-of-Stake (PoS) networks via the Babylon protocol. In return for contributing to the security of these networks, users earn rewards in the form of BABY tokens, Babylon's native token. Additionally, as the Babylon ecosystem expands, users may receive more rewards from additional networks' tokens.

Mark Greenberg, Global Head of Consumer at Kraken, highlighted the significance of this launch, noting that a substantial amount of Bitcoin sits idle on the exchange. He emphasized that this represents a missed opportunity for both clients and the broader ecosystem. By enabling Bitcoin staking, Kraken aims to provide its users with a way to earn a return on their BTC while also bolstering the security of emerging PoS blockchains.

Bitcoin staking on Kraken offers several benefits. It provides a simple and secure way to earn passive rewards on BTC without relinquishing custody. By staking through Babylon's protocol, users delegate their BTC to participate in securing the Babylon Genesis blockchain and its connected Bitcoin Supercharged Networks. The staked Bitcoin is held in a self-custodial, time-locked output on the Bitcoin blockchain until the unbonding period ends.

While users can unstake their Bitcoin at any time, there is an unbonding period of approximately seven days before the funds are unlocked. During this period, the BTC cannot be traded or withdrawn, and rewards are not earned. After the unbonding period expires, the BTC is returned to the user's Spot balance and can be withdrawn or traded.

Kraken manages the entire staking process on behalf of its users, from bonding to reward distribution. The staking mechanism is governed by a smart contract, ensuring transparency and verifiability in how rewards are handled. Furthermore, the BTC staking protocol includes cryptographic safeguards to deter and penalize malicious behaviors.

The launch of Bitcoin staking on Kraken marks a significant expansion of the exchange's staking suite and reinforces its commitment to product innovation. Kraken was one of the first crypto exchanges to introduce custodial staking in 2019, enabling millions of users to earn rewards through its Earn platform. The new Bitcoin staking product is available across all Kraken platform interfaces.