TL;DR
- Kraken introduces a pioneering BTC staking service powered by Babylon, allowing users to earn up to 1% APR without wrapping, lending, or bridging their bitcoin.
- The system ensures that BTC remains on the Bitcoin blockchain while supporting Proof-of-Stake chains through time-lock mechanisms.
- This marks a significant innovation in aligning Bitcoin’s security with DeFi productivity, offering a new way to generate yield while maintaining full asset control.
As Bitcoin continues to solidify its role as the world’s most secure digital asset, Kraken’s latest integration with Babylon unlocks a new function for BTC: passive yield without compromising ownership. For years, BTC holders have had few options beyond long-term holding or participating in high-risk lending schemes. Kraken’s adoption of Babylon’s time-lock protocol offers an alternative, where users can stake bitcoin directly from the exchange, without relinquishing custody.
Through this system, bitcoin is locked on its native blockchain via Taproot-enabled scripts while simultaneously acting as collateral for Proof-of-Stake (PoS) networks. Weekly rewards are distributed in Babylon’s native BABY token. The model is fundamentally different from traditional PoS staking since Bitcoin does not support native staking, but the result is similar: users can now access yield from idle BTC in a verifiable and decentralized manner.
Bitcoin Productivity Without Sacrificing Sovereignty
The launch is currently available to users in select jurisdictions including the U.S. (excluding some states), the U.K., Australia, and the UAE. Kraken emphasizes that at no point is BTC bridged or wrapped into another asset, a key distinction from many other staking services. The process involves a seven-day unbonding period when unstaking, but BTC remains under user control at all times.
Babylon, which launched its Genesis mainnet in April 2025, is positioned as a protocol that enables bitcoin to support PoS chains without leaving its native layer. Participating blockchains include Ethereum, Solana, Chainlink, and Avalanche, all of which can benefit from bitcoin’s economic weight for added transaction security. The integration aligns with growing industry interest in Bitcoin-aligned staking solutions that do not compromise decentralization or custody.
Kraken’s Vision for a Multi-Chain Financial Future
This move adds to Kraken’s growing portfolio of innovative offerings. Beyond staking, the exchange recently launched “Ink”, its own Ethereum Layer 2; entered stock trading in the U.S.; and introduced institutional prime brokerage services. Babylon itself has raised nearly $100 million to date, reflecting investor confidence in its mission to bridge Bitcoin with the broader DeFi space.
With this launch, Kraken reinforces its role as a key player in Bitcoin’s evolving financial utility, combining DeFi efficiency with the unmatched security of BTC.
