Kraken, a leading cryptocurrency exchange, has launched a wrapped Bitcoin token, kBTC. The new token is available on the Ethereum and Optimism networks and is backed 1:1 by Bitcoin.
The move aims to expand the utility of Bitcoin within the decentralized finance (DeFi) ecosystem. Kraken’s kBTC is Bitcoin with improved interoperability across many different blockchain platforms.
This token allows users to trade Bitcoin on the Ethereum-based network, facilitating DeFi access to Bitcoin. The exchange’s years of security expertise creates trust among users.
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The kBTC reserve is secured in a separate wallet and the reserve is publicly verifiable. This step allows users to visualize their tokens and verify that BTC is backing each token. The Bitcoins that back the tokens are securely stored at a Wyoming institution called Kraken Financial.
Kraken’s kBTC is secured with public reserves
Kraken’s kBTC reserves are publicly verifiable through an on-chain address that currently holds 100 BTC. Of this, 80 kBTC is available on the Ethereum network and 20 kBTC is available on the Optimism network.
This setting is intended to provide transaction security and transparency for users. The exchange, which takes security seriously, has partnered with Trail of Bits to audit its kBTC smart contract.
Trail of Bits, a well-known security company, scoured the code for potential vulnerabilities. Kraken’s move to add support for Ethereum and the Optimism Network means new avenues have opened up for Bitcoin users.
This allows you to work with DeFi protocols while using BTC on platforms that do not officially support them. To encourage broader participation, the company has set a minimum deposit requirement of 0.00026 BTC, typically $15.
kBTC users can redeem Bitcoin to gain liquidity
At its launch, kBTC was introduced into DeFi applications such as Paraswap, yearn, Curve, and Velodrome. Kraken has integrated kBTC into many of the most notable projects. Integration with Bitcoin enables new use cases in DeFi, a rapidly growing field.
Expanding kBTC’s presence across these platforms will help Kraken strengthen Bitcoin as a core asset in the cryptocurrency ecosystem. However, Kraken has made it clear that it does not initially intend to launch a spot market related to kBTC.
For kBTC users who wish to trade, they can be used to redeem the underlying Bitcoin. In this case, users still have the option of entering and securing liquidity without having a dedicated spot market.
The Ethereum and Optimism interoperability efforts made by Kraken extend beyond Ethereum and Optimism. kBTC plans to soon expand kBTC’s compatibility with the non-Ethereum Virtual Machine (EVM) ecosystem.
This will further increase Bitcoin’s presence in the broader blockchain ecosystem and allow for more flexibility for users and developers.
kBTC competes with Coinbase in wrapped Bitcoin market
As competition intensifies in the wrapped Bitcoin market, Kraken introduces kBTC. Other exchanges, including Coinbase, recently debuted similar products such as Coinbase Wrapped BTC (cbBTC).
This competitive environment shows that there is a growing demand for wrapped tokens in both the DeFi and cryptocurrency worlds. However, kBTC Wrapped Bitcoin products allow you to use Bitcoin even on networks that don’t natively support Bitcoin.
The launch follows Wrapped Bitcoin (WBTC), which has already gained a market capitalization approaching $10 billion since its release in 2019. The increase in the number of wrapped Bitcoin options reflects Bitcoin’s interoperability.
Kraken’s kBTC competes with other wrapped Bitcoin tokens in its sleekness, but stands out with its enhanced security features and transparent reserves.
Thanks to the exchange’s commitment to user safety and the expertise of its partners, kBTC holds a promising position in the market. This is part of Kraken’s larger theme and commitment to modernizing the cryptocurrency community.