Kraken is launching its own wrapped bitcoin product.
The token will be available on both Ethereum and OP Mainnet.
The launch will also be supported by Paraswap and Morpho.
Crypto exchange Kraken has launched its own wrapped bitcoin (BTC) token, kBTC, the company told CoinDesk in an exclusive interview.
The token will be available on both Ethereum and OP Mainnet, and will be backed 1:1 with bitcoin, a company spokesperson said.
The bitcoin will be custodied in Kraken Financial, the exchange’s U.S. qualified custody solution, in a segregated wallet. The address of this wallet will be made public so that customers can see the bitcoin is in full reserve.
Wrapped tokens allow unsupported crypto assets like bitcoin and ether (ETH) to be traded, lent and borrowed on decentralized finance (DeFi) platforms. The largest such token, WBTC, allows investors to use bitcoin on other blockchains, and has a key role in lending DeFi as collateral, with a market capitalization of around $10 billion.
Kraken is not the only major player to have recently launched a wrapped bitcoin token. There have been a slew of new issues after BitGo, the sole custodian for WBTC, announced a tie up with Tron founder Justin Sun, prompting widespread concern. Rival exchange Coinbase (COIN) launched its own wrapped bitcoin product, the Coinbase Wrapped BTC (cbBTC) on the Ethereum and Base networks, last month.
At launch, kBTC will be supported across several blue-chip DeFi apps, and its partners will include: Kraken, Kraken Wallet, Ethereum, Optimism, Paraswap, Yearn, Gauntlet, deBridge, Definitive, CowSwap, Beefy, Velodrome, Curve and Morpho.
There won’t be any supported spot markets for kBTC at launch, Kraken said, but if clients want to use their bitcoin they can redeem it for the underlying and trade it as they would do normally.
The minimum deposit size for kBTC on both Ethereum and Optimism will be 0.00026 BTC, which is around $15, assuming a bitcoin price of $60,000.
The token launch is part of Kraken’s mission to accelerate the adoption of DeFi, and kBTC is expected to be widely used across the ecosystem.
“We believe in an onchain future and DeFi represents a key part of that opportunity,” said Mark Greenberg, Kraken’s global head of asset growth and management, in emailed comments. “kBTC relies on Kraken’s long history of seamless UX and top-of-the-range security, bringing DeFi to new users and accelerating the adoption of decentralized applications,” he added.