Kraken Introduces kBTC: Bitcoin on Ethereum and OP Mainnet

Kraken’s new Bitcoin-backed token brings Bitcoin into decentralized finance, with transparency and security at its core.

Kraken, a top cryptocurrency exchange, has introduced kBTC, a fully-backed Bitcoin ERC-20 token, to bring Bitcoin's power to the Ethereum and OP Mainnet ecosystems. The launch allows Bitcoin holders to participate in decentralized finance (DeFi) applications while retaining their Bitcoin exposure, joining the increasingly competitive wrapped Bitcoin market.

Each kBTC token is backed 1:1 by Bitcoin held securely by Kraken, giving users the ability to unlock liquidity for decentralized finance platforms without selling their Bitcoin. This approach aims to expand the utility of Bitcoin by enabling it to operate on Ethereum and OP Mainnet, which was formerly known as Optimism.

Transparency is a key feature of kBTC. Kraken assures users that its Bitcoin reserves, which are stored by Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution (SPDI), can be independently verified through on-chain audits. This move provides reassurance to the crypto community as it offers a level of transparency uncommon in the wrapped Bitcoin market.

To kick off, Kraken has allocated 100 Bitcoin, worth about $6.7 million, to back the initial supply of kBTC. The distribution is 80% on Ethereum and 20% on OP Mainnet. Kraken has plans to expand kBTC’s compatibility to more blockchain networks, including non-Ethereum Virtual Machine (EVM) ecosystems, broadening its reach.

Kraken’s launch of kBTC comes at a time of growing competition in the wrapped Bitcoin space, with Coinbase launching cbBTC and 21.co introducing 21BTC. BitGo’s Wrapped Bitcoin (WBTC) remains the market leader with a $10 billion market cap. The race to make Bitcoin interoperable across blockchain networks is heating up, as each product aims to provide more opportunities for Bitcoin holders in the DeFi world.

Mark Greenberg, Kraken’s Global Head of Asset Growth and Management, commented on the significance of kBTC, saying, “The future is on-chain, and kBTC enables users to put their BTC to work and accelerates the adoption of DeFi.” This reflects a broader industry movement to make Bitcoin more versatile and useful beyond just being a store of value.

Kraken also focused on security when developing kBTC. The ERC-20 smart contract underwent a comprehensive audit by Trail of Bits, an external security firm, ensuring the smart contract is safe and reliable for users.

Despite launching kBTC, Kraken has not yet opened any spot markets for the token. However, users can redeem their kBTC for Bitcoin at any time, ensuring liquidity and flexibility for holders.

Several key DeFi projects have already partnered with Kraken to support the launch of kBTC, including deBridge, Gauntlet, ParaSwap, Definitive, and Yearn. These collaborations aim to expand kBTC’s utility across various DeFi applications, providing more opportunities for users to deploy their Bitcoin in decentralized finance.

Kraken’s approach with kBTC not only adds another Bitcoin-wrapped token option but also emphasizes transparency, security, and the importance of Bitcoin’s role in the evolving DeFi space. As the competition in this market grows, Kraken’s long-standing reputation and commitment to regulatory compliance might give kBTC an edge in attracting users.

photo source / Blockonome