Kraken Launches kBTC: Wrapped Bitcoin Token Interoperable With Ethereum and OP Mainnet
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Kraken Launches Wrapped Bitcoin to Broaden DeFi Integration
Kraken has officially introduced Kraken Wrapped Bitcoin (kBTC), an ERC-20 token designed to bridge Bitcoin with Ethereum and OP Mainnet, announced on October 17, 2024.
The token is fully backed by Bitcoin held under Kraken’s custody, allowing Bitcoin to interact with decentralized applications (DApps) on multiple blockchain networks. Kraken plans to expand the reach of kBTC by enabling compatibility with non-EVM ecosystems, aiming to enhance Bitcoin’s utility within decentralized finance (DeFi).
Security and transparency are key pillars of this release. Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution (SPDI), is responsible for kBTC’s custody.
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In addition, the token’s ERC-20 smart contract underwent an audit by the renowned security firm Trail of Bits, which previously audited projects such as Worldcoin. The audit included a thorough analysis of the codebase and architecture, and Kraken confirmed that kBTC passed with no significant vulnerabilities. To reinforce transparency, Kraken allows users to verify kBTC’s reserves through on-chain links that track Bitcoin holdings on both Ethereum and OP Mainnet.
Kraken has collaborated with several DeFi players to back the launch of kBTC. These include Paraswap, a decentralized exchange aggregator; Yearn Finance, a yield farming protocol; Gauntlet, a risk management platform; deBridge, a cross-chain liquidity protocol; and Definitive, a financial platform. The partnerships are part of Kraken’s broader strategy to push Bitcoin’s use into the decentralized space, furthering its presence in networks reliant on smart contracts and DApps.
This move by Kraken follows an industry-wide trend of Bitcoin interoperability, as seen with Coinbase’s introduction of cbBTC earlier this year. Kraken highlighted the importance of this development, stating that kBTC underscores Bitcoin’s dominance in the crypto world while unlocking new opportunities for DeFi integration.
Wrapped tokens like kBTC offer a way for Bitcoin to operate on Ethereum-based platforms, bypassing the limitations of Bitcoin’s own network. Kraken’s announcement reaffirms its commitment to security, innovation, and Bitcoin’s growing role within DeFi.
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A New Era for Bitcoin DeFi Adoption
Wrapped tokens are not new, with Wrapped Bitcoin (WBTC) being the first of its kind launched in 2019. Since then, WBTC has grown to become the second-largest wrapped token by market capitalization, standing at $10 billion. Lido’s Wrapped Staked Ether (wstETH) currently leads the market at $11 billion.
Kraken’s kBTC enters this evolving landscape with the goal of furthering Bitcoin’s use in decentralized applications, following in the footsteps of these major wrapped assets. Kraken emphasized the importance of kBTC in empowering developers and crypto builders to explore new uses for Bitcoin, reinforcing its role as a foundational asset in the decentralized space.
This push for interoperability comes at a critical time, as the demand for Bitcoin’s integration into the broader crypto ecosystem increases. With DeFi platforms growing in importance, Kraken’s kBTC brings additional options for users and developers who seek to leverage Bitcoin’s liquidity in decentralized applications. Through this initiative, Kraken positions itself as a key player in expanding Bitcoin’s reach beyond its native network, offering new ways for the asset to drive innovation within decentralized finance.
This article has been refined and enhanced by ChatGPT.
