Cryptocurrency exchange Kraken introduced a new yield product that attracted great interest from investors. The company announced this product on July 10, which provides Bitcoin holders with an annual income of 2.5% and is non-custodial, meaning the funds are under user control.
Details of the new product and first reactions
This step by Kraken was taken in response to the recent search for increased returns among Bitcoin investors. While it was easier to obtain returns in smart contract-based blockchain networks such as Ethereum and Solana, such an opportunity did not exist on the basis of Bitcoin. For this reason, users in the Bitcoin ecosystem have been demanding similar simple and secure alternatives for a long time.
Kraken collaborated with Veda, a crypto yield infrastructure provider, to bring the product to life. In the statement made by Veda, it was stated that this platform aims to eliminate the technical difficulties in moving Bitcoin to different wallets or assets. In other words, users can generate income from their existing assets without having to deal with additional software or wallet management.
“Many Bitcoin owners want to easily earn returns on the Bitcoin they have collected. As Kraken, we offer a simple solution to this need.” This is how Kraken Earn product director John Zettler pointed out investors’ expectations.
Just 10 hours after the product was announced, it was announced that a total of $30 million worth of Bitcoin had been deposited from more than 4,000 different wallets. This rapid interest shows the high expectations of Bitcoin owners regarding returns.
Earnings mechanism and operation
Kraken’s new product turns Bitcoin into a one-to-one token called ‘kBTC’. Then, another platform, Sentora, distributes these tokens among crypto lending platforms such as Aave, Morpho, and Tydro. Thanks to these steps, Bitcoin owners have the opportunity to earn additional income while remaining tied to the original value of their assets.
Mini dictionary: Non-custodial product defines services where crypto assets are kept entirely under the personal control of the user rather than a third-party institution and can be withdrawn when desired without unauthorized access.
In this solution offered by Kraken, only the owners can make transactions on the deposited Bitcoins and withdraw the funds whenever they want. However, there is a waiting period of approximately 5 days for withdrawals. The company and the platforms it cooperates with receive a 25% success fee from the rewards obtained.
Other return products from Kraken
Kraken also recorded remarkable growth in the three different stablecoin yield products it launched in January. According to company data, total customer deposits on these products have exceeded $245 million and users have earned over $2.2 million so far.
| Product Type | Launch Date | Total Deposited Amount | Winning Rate | Return Distribution |
|---|---|---|---|---|
| Bitcoin Yield | July 10, 2024 | 30 million dollars | 2.5% p.a. | Lending platforms |
| Stablecoin Yield (3 items) | January 26, 2024 | $245 million | Variable | Various |
General trend and competition in the market
Bitcoin-based income products have been available in limited numbers in the market for a long time. However, following increased investor interest, other major exchanges and platforms are also turning to developing new products. As a matter of fact, in a different example recently, Coinbase and Apex Group tokenized the product called Bitcoin Yield Fund and started offering it to investors.
