Kraken Shatters Norms with Native Bitcoin Staking via Babylon—Unlocking BTCFi’s $1T Potential

Kraken just dropped a hydrogen bomb on crypto's status quo—letting users stake Bitcoin natively for the first time. No wrapped tokens, no synthetic derivatives. Just raw BTC earning yield through Babylon's trust-minimized protocol.

Why this matters: The $600B Bitcoin mountain has been the industry's idle gold—until now. Kraken's move could funnel even 1% of that into staking, creating a $6B revenue stream overnight (and giving TradFi suits night sweats).

The BTCFi revolution won't be centralized: Babylon's cryptographic proofs slash custodial risk, letting Kraken offer staking without swallowing keys whole—a rare win for decentralization purists.

Watch the dominoes fall: Expect every major exchange to scramble for copycat products within 90 days. After all, nothing motivates crypto VPs like seeing a competitor print free money from dormant assets.

Last thought: If Bitcoin becomes a yield-bearing asset, does that make it a security? (Cue the SEC's collective aneurysm.)

• Kraken users can now stake Bitcoin natively and earn BABY tokens as staking rewards.
• The BABY token rose nearly 5% after Kraken launched its new Bitcoin staking service.
• Bitcoin staked on Kraken stays on-chain, secured by Babylon’s native smart contract vault.

Kraken has announced the launch of a new Bitcoin staking product, marking a major expansion of its staking suite. The move comes through a direct integration with Babylon a Bitcoin-native staking protocol. Starting Thursday, Kraken customers will be able to stake their Bitcoin directly on the exchange, generating a passive reward on Bitcoin holdings without bridging, wrapping, or lending.

BTC Staking is here — powered by Babylon, now on Kraken.

✔️ Up to 1% APR – paid in $BABY
✔️ No bridging, wrapping or lending required
✔️ Unlimited staking
✔️ Weekly payouts

Put your bitcoin to work ⬇️https://t.co/OUqlgTKc8G pic.twitter.com/usctmQ9vzH

The new service locks Bitcoin in a vault on the Bitcoin blockchain. The crypto exchange’s users delegate their staked assets to help secure proof-of-stake (PoS) networks through Babylon. In return, users receive Babylon’s native BABY token as staking rewards, not Bitcoin itself. The BABY token price climbed nearly 5% following the news, according to CoinMarketCap.

Mark Greenberg, Kraken’s global head of consumer, explained that “a substantial amount of Bitcoin currently sits idle on our exchange, representing a significant opportunity cost for clients and a missed opportunity for the broader ecosystem.” He noted that this initiative allows users to generate returns on their Bitcoin while supporting the security of emerging PoS networks.

Babylon Protocol Brings Native BTC Staking to Crypto Exchanges

The Babylon protocol enables native Bitcoin staking without leaving the Bitcoin blockchain. Upon this integration, Kraken users receive full control over their Bitcoin which remains on-chain and never leaves the network. Staking is implemented through smart contracts and cryptographic security which provides transparency and deters malicious behavior.

Kraken customers can access the new staking feature through all exchange interfaces, including Kraken Pro. The service allows users to unstake their assets at any time, subject to a seven-day unbonding period before funds return. The entire process stays on-chain, increasing user trust and security.

Babylon’s staking model splits rewards from an 8% annual inflation rate—4% goes to BTC stakers and 4% to BABY stakers. The BABY token also serves as a transaction fee medium and governance token for protocol changes.

Bitcoin DeFi Ecosystem Expands with New Staking Offerings

The rollout of native Bitcoin staking on Kraken is an indicator of the increased interest in Bitcoin-backed decentralized finance (BTCFi). In the past, Bitcoin was primarily regarded as a store of value and a medium of exchange. The new features in Bitcoin, like Babylon and layer-2 solutions, have created new monetary possibilities for Bitcoin holders. Platforms like Rootstock and Stacks have also expanded Bitcoin’s utility within decentralized finance.

Binance Research has identified Bitcoin DeFi as having potential, but only approximately 0.8% of the overall supply of Bitcoin is currently involved in DeFi protocols. This dismal engagement offers what the firm described as a “large untapped opportunity.” Kraken’s new product continues to contribute to the list of exchanges introducing DeFi services to users holding Bitcoin.

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