Cryptocurrency exchange Kraken has launched a new non-custodial yield product that allows Bitcoin holders to earn an annual return of 2.5 percent while keeping full control of their funds. The product was unveiled to strong investor interest on July 10, with deposits immediately following the announcement.
Details of the new product and user response
Kraken’s move addresses the growing appetite for yield among Bitcoin investors. While networks like Ethereum and Solana have enabled easy yield generation through their smart contract capabilities, such opportunities for Bitcoin owners have been virtually nonexistent until now. Many in the Bitcoin ecosystem have long called for simple yet secure alternatives.
To bring the product to life, Kraken partnered with the crypto yield infrastructure provider Veda. Veda stated that its platform is designed to eliminate the technical barriers involved in moving Bitcoin between wallets or assets. This means users can generate income from their existing holdings without the hassle of setting up extra software or managing additional wallets.
“Many Bitcoin holders want to easily earn yield on their accumulated Bitcoin. At Kraken, we’re offering a straightforward solution to meet this need,” remarked John Zettler, Product Director for Kraken Earn, highlighting how the new offering aligns with investor expectations.
Just ten hours after the product went live, over $30 million worth of Bitcoin had already been deposited from more than 4,000 unique wallets. This rapid influx underscores the strong demand among Bitcoin holders for yield-generating opportunities.
How the yield mechanism works
Kraken’s new offering converts deposited Bitcoin into a one-to-one token called ‘kBTC.’ Another platform, Sentora, then distributes these kBTC tokens across crypto lending protocols such as Aave, Morpho, and Tydro. This approach allows users to maintain exposure to Bitcoin’s price while simultaneously earning extra returns.
Mini glossary: A non-custodial product refers to a service where cryptocurrencies remain fully under the user’s personal control rather than being held by a third party, allowing withdrawals at any time without unauthorized access.
With Kraken’s solution, only the asset owners themselves can access or manage their deposited Bitcoin, and withdrawals are possible at the user’s discretion. However, withdrawals are subject to a waiting period of about five days. Both Kraken and its partner platforms collect a 25 percent performance fee from the rewards generated.
Kraken’s other yield products
Kraken has seen notable growth in its three stablecoin yield products launched in January. Company data reveals these offerings have surpassed $245 million in total customer deposits and generated over $2.2 million in earnings for users to date.
| Product Type | Launch Date | Total Deposited | Yield Rate | Yield Distribution |
|---|---|---|---|---|
| Bitcoin Yield | July 10, 2024 | $30 million | 2.5% per year | Lending platforms |
| Stablecoin Yield (3 products) | January 26, 2024 | $245 million | Variable | Various |
Industry trends and competition
Yield products based on Bitcoin have been scarce in the market for quite some time. However, the clear surge in investor interest has prompted other major exchanges and platforms to develop their own new offerings. Recently, for example, Coinbase and Apex Group joined forces to introduce the tokenized Bitcoin Yield Fund for investors.
