Kraken, one of the cryptocurrency exchanges, announced that it offers a new service that allows Bitcoin owners to earn additional income from their assets. This product, called Bitcoin Vault, aims to enable investors to passively earn returns without selling their Bitcoins or dealing with complex transactions. This product, which can be accessed directly through the platform, has been developed for long-term Bitcoin owners.
Simple Passive Income is the Goal with Bitcoin Vault
Kraken stated that it has included Bitcoin Vault in its Earn product family and users can earn rewards without depending solely on Bitcoin price movements. Thanks to this product, users can directly access earning opportunities without having to withdraw their assets from the stock market and manually evaluate them in other protocols.
Kraken Earn Products manager John Zettler explained the need for this solution with the following words:
Many of our customers are looking for ways to easily and securely generate income from their Bitcoins, which they intend to keep long-term. Bitcoin Vault was designed for exactly this approach; Our main priority is to provide simple access and a user-friendly experience.
The company stated that the Bitcoin Vault participation process works fully integrated in both the main application and the Kraken Pro platform, and users can join the system without the need for any external wallet or third-party transaction. This product will be available for use only in legally appropriate regions.
Technical Infrastructure and DeFi Supported Working Model
The technical infrastructure behind Bitcoin Vault is provided by Veda and Sentora, which operate in the field of decentralized finance (DeFi). Bitcoins deposited by users are evaluated in various DeFi protocols and generate income. Here, funds are transferred to well-known credit protocols such as Aave, Morpho and Tydro, and this system works with the logic of secured lending.
Mini dictionary: Overcollateralized lending is a credit model in which the value of the collateral used is kept higher than the amount borrowed. In DeFi, users pledge higher than required collateral for the security of the system; Thus, the risk in sudden price fluctuations is minimized.
In this type of vault products, users’ Bitcoins are combined in the pool and automatically distributed to various strategies and protocols. In this way, income can be generated without the need for manual transactions, individual processes such as lending, staking or providing liquidity. Kraken stated that the system offers its users the opportunity to trade without worrying about technical details with its automatic risk management and rebalancing mechanism.
| Protocol | Role |
|---|---|
| Aave | Generates interest income by providing BTC secured loans |
| morpho | Provides returns in an optimized credit market |
| tydro | Uses BTC as collateral with different strategies |
Trends in Market Demand and Vault Models
Kraken points out that the demand for passive income-generating products in the crypto market has increased recently. Especially long-term investors are interested in reliable and transparent alternatives where they can evaluate their assets.
In the company’s statement, it was emphasized that the classical lending structures offered by central exchanges face insecurity, especially during the market declines in 2022, but the new generation vault products offer onchain transparency. It was stated that over 240 million dollars of assets have been managed to date in Kraken’s general product portfolio called DeFi Earn. It was underlined that this growth was driven by real user demand rather than extra token rewards.
Finally, it was stated that Bitcoin Vault is now available in eligible countries and is part of Kraken’s goal to diversify onchain financial services in this area.
