Kraken Launches Bitcoin Staking via Babylon, Unlocking New BTC Rewards

Available to customers in the U.S. (with some state exceptions), U.K., Australia, and UAE, the feature demands that users simply hold BTC in their Kraken account. There's no minimum staking amount or max cap—clients can stake as much as they wish. However, state-level exclusions apply in California, Maine, Maryland, New Jersey, New York, Washington, and Wisconsin.

Bitcoin has historically been non-staking, secured exclusively through Proof-of-Work (PoW). With the introduction of Babylon, BTC holders can now lock their coins in time-locked, self-custodial outputs on the Bitcoin network to help secure external Proof-of-Stake (PoS) systems—earning rewards in return. This innovation marks a major step in expanding Bitcoin’s role in decentralized finance, offering a new use case beyond storing or transacting value.

Babylon’s protocol works entirely on‑chain using Bitcoin scripts. By delegating locked BTC, users bolster the security of interoperable PoS chains—referred to as “Bitcoin Supercharged Networks” (BSNs). In return, stakers receive BABY tokens, fueling both security and decentralized finance applications.

Kraken’s offering utilizes Babylon's bonded staking method. Once users opt in, their BTC becomes locked in a Bitcoin smart output and staked via Babylon. When staking becomes active, rewards accrue daily and are paid weekly in BABY tokens. The estimated Annual Percentage Rate (APR) ranges between 0.5% to 1%, though it can fluctuate with market conditions and participation rates.

Unstaking—or "unbonding"—can be initiated anytime but triggers a protocol‑enforced seven‑day delay during which the BTC remains locked and earns no rewards. On expiry, the BTC is returned to users' Kraken spot wallets for trading or withdrawal.

Kraken is positioning this offering as a way to realize returns on otherwise idle BTC, addressing a key pain point for crypto investors. Mark Greenberg, Kraken’s Global Head of Consumer, stated: "With this launch, clients can earn a return on their BTC while also enabling emerging PoS blockchains to benefit from the economic weight of Bitcoin in order to validate transactions and bolster the security of their networks."

Babylon’s integration streamlines BTC staking—eliminating the need for bridging or wrapped tokens. Kraken manages all staking mechanics, allowing clients to earn rewards without navigating technical complexities. According to Kraken’s Global Head of Consumer, Mark Greenberg, the launch expands Bitcoin’s role in securing decentralized networks and opens new opportunities for BTC participation in the broader crypto economy.

Babylon’s protocol is designed with risk mitigation in mind. BTC staking is protected through cryptographic time-locks and enforced by a covenant committee that oversees validator behavior and applies slashing penalties when necessary. These safeguards introduce PoS-style accountability using mechanisms built on top of Bitcoin’s native scripting capabilities.

Getting started is simple. Kraken users navigate to the “Earn” tab, select their BTC balance under “Staking Bonded,” choose an amount to stake, and confirm. Once activated, rewards and the estimated APR are displayed, clarifying expectations. BTC remains secure on-chain; Kraken handles all technical operations behind the scenes.

Weekly BABY token payouts are credited to users' Kraken wallets. These tokens not only represent staking rewards but also act as an on-ramp to Babylon’s broader ecosystem across BSNs.

Clients benefit from passive income, custodial security, and a low entry barrier. There’s no need to bridge assets or manage smart contracts. However, users should also be aware of risks. These include price volatility in BABY tokens, the fixed seven-day lock-up period during unstaking, and the inherent technical risks tied to protocol design and validator behavior.

Babylon’s staking protocol launched in August 2024, rapidly evolving to support thousands of BTC and delegations. By December 2024, the network had passed $2 billion in Total Value Locked (TVL), and recent stats suggest around $4 billion—demonstrating robust adoption across retail and institutional users.

Integrations with major custodians and platforms—including Binance, Anchorage Digital, Leap Wallet, and Onekey—further solidify Babylon’s ecosystem approach, making Kraken’s integration even more timely.

Babylon’s roadmap outlines progressive phases: multi‑staking, cross‑chain expansion, and enhanced utility across Cosmos and Ethereum ecosystems via its Bitcoin Secured Network (BSN) architecture. Kraken’s native staking feature gives its clients a front-row seat in this emerging architecture.

Kraken’s introduction of Babylon-powered BTC staking marks a milestone in crypto’s evolution. It empowers BTC holders to generate passive yield, supports the security of decentralized PoS networks, and pushes Bitcoin further into the realm of DeFi. As adoption grows, this could redefine how Bitcoin is utilized and integrated across blockchain ecosystems.

For retail and institutional users alike, Kraken’s latest feature offers a secure, on-chain approach to earning with BTC, signaling the dawn of a more dynamic era in Bitcoin’s utility.