Cryptocurrency exchange Kraken has launched Wrapped Bitcoin kBTC, a new DeFi token initially available on Ethereum and OP Mainnet. The new token poised to offer fresh Optimism to the decentralized finance (DeFi) space aims to bridge the gap between Bitcoin and DeFi, enabling users to convert their BTC seamlessly to alternative tokens.
According to an official blog post, Kraken’s wrapped Bitcoin token will be fully backed 1:1 with a similar amount of actual BTC held within Kraken’s Financial’s US custody solution, offering a viewable reserve wallet for transparency. The statement by Kraken additionally stated that “Bitcoin’s fundamental strengths – security, scarcity and its role as a store of value” were extending further to its utility into DeFi and beyond.”
Offer Users Access to DeFi Applications
The wrapped Bitcoin kBTC token is designed to enable holders of an asset like Bitcoin to use them in DeFi platforms to perform activities like trading, lending and borrowing. The new token joins a growing list of wrapped tokens, including the recently launched Coinbase Wrapped Bitcoin (cbBTC). The new token is intended to introduce new users to DeFi and accelerate the adoption of decentralized applications (DApps).
Wrapped Bitcoin has recently become a popular tool for cross-chain interaction, enabling users to leverage the value of Bitcoin as they engage in the Optimism and Ethereum blockchains. By introducing the Wrapped Bitcoin kBTC, Kraken ensures users can access DeFi applications, spreading their reach beyond simply holding and trading BTC. With Kraken’s wrapped Bitcoin, users can seamlessly interact with Ethereum-based DeFi projects and decentralized exchanges. As a result, the move has the potential to unlock Bitcoin’s vast liquidity to DApps as users participate in activities like crypto staking, providing liquidity and yield farming.
Promote Blockchain Interoperability
Apart from Ethereum, wrapped Bitcoin kBTC will also be available on the Optimism ecosystem, a layer-2 solution on the Ethereum blockchain. Users on Optimism can leverage the platform’s increased scalability, leading to relatively lower transaction fees. By introducing Kraken’s wrapped Bitcoin to the network, users can access a more efficient DeFi solution that is available to a broader audience. The choice of both Ethereum and Optimism speaks boldly about Kraken’s belief in promoting blockchain interoperability to create a broader industry that benefits the dynamic DeFi landscape.
Kraken’s wrapped Bitcoin kBTC doesn’t support spot markets, meaning users could redeem the token for the underlying asset. The statement from Kraken says users could deposit a minimum of 0.00026 BTC for the wrapped Bitcoin kBTC valued at around $15. With the current launch, the cryptocurrency exchange intends to boost DeFi adoption in partnership with leading DeFi Apps Paraswap, Yearn, and Curve, among others. Commenting on the launch, Mark Greenberg, the firm’s Global head of Asset Growth, said the exchange believed in an “on-chain future, and DeFi represents a key part of that opportunity.”
In addition to cryptocurrency exchange Kraken, there are several other issuers of different versions of wrapped bitcoin. Crypto exchange Coinbase recently rolled out a tokenized version of BTC on Ethereum (cbBTC). 21Shares is also on record for creating 21BTC on Ethereum, a wrapped Bitcoin product, while BitGo also created a wrapped Bitcoin WBTC token in January 2019. WBTC became one of the leading Bitcoin-based ERC-20 DeFi tokens with native integrations on several blockchains, including Base, Osmosis, Tron, and Ethereum.
Conclusion
The decision by Kraken to launch the wrapped Bitcoin kBTC on the Ethereum and Optimism Networks demonstrated a commitment to promoting the creation of innovative financial tools that enable crypto users and offer them greater flexibility in managing their assets.
As decentralized finance continues to gain ground within the crypto community and financial services sectors, the launch of Kraken’s wrapped Bitcoin is opening up the crypto stage to benefit from Bitcoin’s excellent liquidity. If all goes according to plan, introducing a new DeFi tool is expected to enhance greater Bitcoin adoption, encouraging more users to benefit from the DeFi services.
