In a bold move reflecting the rapidly evolving landscape of decentralized finance (DeFi), crypto exchange Kraken has unveiled a cutting-edge Bitcoin staking service via Babylon. Announced today, June 20, 2025, this development allows users to stake their Bitcoin directly on the blockchain, transforming BTC from a mere store of value into an active component of the burgeoning DeFi ecosystem.
A New Era for Bitcoin
Kraken’s integration with Babylon—a protocol inherently designed for Bitcoin—marks a significant leap forward. Babylon enables Bitcoin’s use in securing proof-of-stake (PoS) networks without necessitating a departure from the native chain. This seamless integration means Kraken users can lock their Bitcoin in a custodial vault, delegating it to PoS networks through Babylon. As a result, users earn rewards in BABY, the token associated with Babylon Genesis, a Bitcoin-anchored Layer 1.
Mark Greenberg, Kraken’s Global Head of Consumer, expressed enthusiasm about the launch, stating, “With this launch, clients can earn a return on their BTC while also enabling emerging PoS blockchains to benefit from the economic heft of Bitcoin to validate transactions and enhance network security.” It’s a win-win scenario—users can gain from their holdings while supporting the network’s integrity.
The Untapped Potential of Bitcoin DeFi
Bitcoin, traditionally lauded as a store of value and medium of exchange, is now finding its place within the DeFi sector. Binance Research’s March report highlighted Bitcoin’s evolution into a broader decentralized finance ecosystem, with only about 0.8% of Bitcoin’s supply currently engaged in DeFi. This low percentage suggests a vast, untapped potential—a goldmine, if you will, waiting to be explored. For more insights into Bitcoin’s expanding role in DeFi, see our coverage of Bitcoin DeFi Is Taking Root on Sui.
The introduction of staking via Babylon by both Kraken and its rival Binance underscores a competitive push to harness Bitcoin’s untapped potential. Binance, too, offers a similar Bitcoin staking option, illustrating a broader industry trend towards integrating Bitcoin into the DeFi fabric.
Technical Safeguards and User Flexibility
Security and flexibility are at the forefront of Kraken’s offering. The staking mechanism is fully on-chain, leveraging Bitcoin scripts and cryptographic safeguards to deter malicious activity. Users enjoy the flexibility of unstaking at any time, subject to a 7-day unbonding period. This feature underscores Kraken’s commitment to user-centric innovation, a philosophy that has driven their custodial staking services since 2019.
The broader implications of this development are profound. By integrating Bitcoin into the PoS ecosystem, Kraken and Babylon are effectively broadening Bitcoin’s utility. The decentralized finance landscape is shifting, and Bitcoin, once perceived merely as digital gold, is stepping into a new role—one where it actively participates in securing and validating decentralized networks. This shift is mirrored in projects like Elastos, which recently debuted a BTC-backed stablecoin to further integrate Bitcoin into DeFi.
Looking Ahead
As Kraken rolls out this innovative staking service across all platforms, the question remains: how will this reshape the DeFi landscape? The move raises intriguing possibilities for Bitcoin’s future role. Will Bitcoin staking become mainstream, or will it remain a niche endeavor within the crypto community?
As the dust settles on today’s announcement, one thing is clear—Bitcoin’s journey is far from over. With the advent of staking and DeFi integration, the world’s largest cryptocurrency is poised to redefine its role in the digital asset ecosystem. For Bitcoin enthusiasts and skeptics alike, the unfolding story promises to be one of innovation and transformation. Keep your eyes on the horizon; Bitcoin’s next chapter is just beginning.
Source
This article is based on: Crypto Exchange Kraken Adds Bitcoin Staking Via Babylon as BTC Driven DeFi Picks Up
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
