Users can now acquire BABY tokens by participating in Kraken’s Bitcoin staking service, which collaborates with Babylon.
Kraken, a cryptocurrency exchange, has implemented a protocol integration with Babylon Labs to introduce a new Bitcoin staking product.
On Thursday, Kraken announced that it has partnered with Babylon, a Bitcoin staking protocol. The integration enables the exchange’s users to earn interest on their Bitcoin holdings without bridging, packaging, or lending.
Starting today, Kraken clients can utilize the service by staking their Bitcoin without engaging with off-exchange wallets.
The Babylon protocol is used to delegate Bitcoin to secure proof-of-stake (PoS) networks, keeping it sealed in a vault on the Bitcoin blockchain.
The rewards are not issued in Bitcoin; Babylon’s BABY token is awarded to consumers. CoinMarketCap reports that the price of BABY has increased by roughly 5% since the announcement.
The pursuit of utility through Bitcoin staking
According to Mark Greenberg, Kraken’s global head of consumer, “a significant quantity of Bitcoin is currently being held idle on our exchange.” He believes this idle asset is “a missed opportunity for the broader ecosystem and a significant opportunity cost for clients.”
Greenberg stated that clients can now generate a return on their Bitcoin through the Babylon integration. He also emphasized the additional benefit of “allowing emerging PoS blockchains to leverage the economic weight of Bitcoin to validate transactions and enhance the security of their networks.”
BTCFi is experiencing a renaissance.
Financial ventures that are constructed on Bitcoin are referred to as BTCFi. The Omni Layer, which was introduced on July 31, 2013, was arguably one of the first such developments. Before the creation of Ethereum, it was the sole method of transporting Tether’s USDt USDT $1.00 stablecoin.
Nevertheless, BTCFi’s focus is primarily on recent initiatives, including Babylon. Babylon is a Bitcoin-secured network that allows Bitcoin holders to stake BTC natively, without packaging or bridging, to secure PoS blockchains while maintaining control over their assets.
Staking is conducted through time-locked protocols, eliminating the necessity for intermediaries. Rewards are generated from an annual inflation rate of 8%, with 4% allocated to BTC stakers and 4% to BABY stakers. BABY can be used to pay transaction fees and allows holders to vote on protocol modifications.
Layer-2 blockchains constructed on Bitcoin Stacks, Ethereum virtual machine-compatible Bitcoin sidechains Rootstock and the Liquid Network, and the scalability solution Lightning Network, coupled with a tokenization layer, Taproot Assets, are additional examples of BTCFi.
According to reports from early May, the first quarter of 2025 saw a significant increase in network security and mining engagement on the innovative contract platform Rootstock.
Binance, a prominent cryptocurrency exchange, conducted research in April that revealed that the value of Bitcoin-based decentralized finance has increased by over 2,700% in the past year.
In March, Brendon Sedo, the initial contributor to the Core DAO, contended that Bitcoin transcends the “digital gold” narrative due to the emergence of BTCFi.
