Kraken Launches Wrapped Bitcoin (kBTC) Token: A New Way to Access Bitcoin on DeFi

Kraken, a popular cryptocurrency exchange, has introduced kBTC, a wrapped Bitcoin variant. This new token is intended to enable the use of Bitcoin in dApps on Ethereum and OP Mainnet platforms.

Real Bitcoin, which is kept by Kraken Financial, a unique depository organization with headquarters in Wyoming, fully backs each kBTC token at a 1:1 ratio.

In DeFi, wrapped Bitcoin tokens, such as kBTC, make Bitcoin more flexible and practical. Bitcoin is typically incompatible with Ethereum and other networks of a similar nature.

To address this issue, wrapped Bitcoin enables Bitcoin to function on these platforms as an ERC-20 token, which is a common Ethereum token.

With kBTC, users can still hold an asset that is correlated with the value of Bitcoin while using DeFi capabilities like lending, borrowing, and trading.

.@krakenfx has launched its own wrapped $BTC token $kBTC. https://t.co/OSlrLMELU2

— CoinDesk (@CoinDesk) October 18, 2024

The introduction of kBTC by Kraken follows the introduction of cbBTC, a wrapped Bitcoin token, by Coinbase, another significant cryptocurrency exchange.

The present leader in tokenized Bitcoin, WBTC, with a market valuation of about $10 billion, is being challenged by this burgeoning competition in the wrapped Bitcoin industry.

Kraken has opened up an address of its kBTC reserves to the public in an effort to foster trust and openness. By doing this, users can confirm that every kBTC token is supported by real Bitcoin.

Currently, Kraken has 100 BTC in its custody wallet, of which 20 kBTC is on the OP Mainnet and 80 kBTC is released on Ethereum. Additionally, Kraken revealed plans to extend the interoperability of kBTC to additional networks, including those not included in the EVM ecosystem.

Introducing $kBTC – an ERC-20 token fully backed 1:1 by Bitcoin, held securely by Kraken and always verifiable onchain.

More possibilities.
More functionality.
More transparency.

Let’s take a closer look ⤵️ pic.twitter.com/VammHbyJKm

— Kraken Pro (@krakenpro) October 17, 2024

The fact that kBTC is compatible with other networks is one of its main benefits, which makes it simpler for developers to create dApps that use Bitcoin’s value. In order to offer kBTC at launch, Kraken worked with a number of platforms, namely deBridge, Definitive, Gauntlet, ParaSwap, and Yearn. These collaborations should contribute to the expansion of kBTC’s application and usefulness in the DeFi market.

Kraken stresses that kBTC is based on its thirteen years of experience in the cryptocurrency space and is not just another packaged Bitcoin product. A trustworthy security company, Trail of Bits, has inspected the kBTC smart contract, highlighting the significance of security.

According to Kraken, the introduction of kBTC is a component of its broader goal to hasten the uptake of DeFi. Kraken wants to increase the number of networks that Bitcoin is compatible with in order to attract more users to the DeFi ecosystem and facilitate their decentralized Bitcoin usage. At launch, users will be able to exchange their kBTC for the underlying Bitcoin, even though there are no plans to enable spot markets for kBTC.

Bitcoin owners now have a new option to interact with decentralized apps using Kraken’s kBTC while still enjoying the security and openness for which Kraken is renowned. In the expanding field of decentralized finance, kBTC hopes to establish itself as a significant asset through its support from actual Bitcoin, alliances with top DeFi platforms, and future growth plans.