Kraken Launches Bitcoin Staking with Babylon, Rewards in BABY Token
Kraken has partnered with BTCFi protocol Babylon to enable native Bitcoin staking directly on its exchange. Users can now stake BTC without off-exchange transfers, cross-chain swaps or wrapping. Staked BTC remains locked on Bitcoin’s mainnet and is delegated by Babylon to Proof-of-Stake chains to bolster network security. In return, participants earn Babylon’s native BABY token. Following the announcement on June 19, BABY rose nearly 3% on CoinMarketCap. Kraken’s Global Consumer Head Mark Greenberg highlighted the opportunity cost of idle BTC on the platform and said this product allows users to generate yield while supporting emerging PoS networks. Babylon employs a self-custodial model: BTC is locked via on-chain scripts and provides “security consensus services” to multiple layer-2 networks. The protocol mints BABY at an annual inflation rate of 8%, distributing 4% to BTC stakers and 4% to BABY stakers. BABY can be used for transaction fees and governance. The broader BTCFi sector is booming: Binance data shows BTCFi TVL surged over 2,700% year-on-year, with sidechain Rootstock’s DeFi lockups hitting a record $215 million in Q1 2025.
Bullish
Kraken’s integration of Babylon’s BTC staking elevates Bitcoin utility by offering exchange-native yield in BABY tokens, likely driving increased demand for both BTC and BABY. The move taps into the rapid BTCFi sector growth—TVL up 2,700% year-on-year—and mirrors past successful exchange staking launches that boosted token prices and user engagement. In the short term, traders may buy BABY to capture staking rewards and protocol incentives. Long term, sustained staking demand could enhance BTC liquidity management on exchanges and solidify BTCFi as a major DeFi segment, supporting broader market optimism.