One of the world’s most prominent cryptocurrency exchanges, Kraken, is now officially in the market of wrapped Bitcoin, announcing its fully backed ERC-20 token, kBTC. Announced on October 17, this new token will help Bitcoin become more useful in decentralized finance (DeFi) while interoperable with Ethereum, OP Mainnet networks and maximum security and transparency for users.
Wrapped Bitcoin (kBTC) represents a big step forward in taking Bitcoin’s utility beyond its traditional investment and transaction purposes. At the same time, Kraken hopes to bring Bitcoin into the fast growing DeFi (decentralized financial) world by launching kBTC, as it typically happens in the other networks like Ethereum and similar which support smart contracts.
Kraken’s kBTC offers Flexibility across Ethereum and OP Mainnet
Using kBTC, we’re providing more Bitcoin networks with the power of BTC, backed by Kraken’s full decade of trust and security, the company said in a public statement. With its in-depth understanding of what makes the best-wrapped token, the exchange has used its knowledge to guarantee that kBTC is not just another wrapped token but a trusted token that users can trust for transparency and security.
One of the core features of Kraken’s kBTC is that it is fully backed 1:1 with Bitcoin. To ensure that the underlying BTC reserves are always fully supported, Kraken has acted in ways. Bitcoin is stored in a segregated wallet which is publicly available, putting the BTC in the company’s wallet. With this in place, customers are able to verify, at any time, that reserves are properly maintained.
According to Kraken, at the time of writing 100 BTC are currently in the custody address, with 80 kBTC sitting on the Ethereum address and 20 kBTC on the OP Mainnet (formerly referred to as Optimism). Both this feature and the division across two major networks gives users the flexibility to interact with DeFi applications on either platform.
The kBTC ERC-20 smart contract was audited by Kraken with the help of Trail of Bits, one of the most well-known security firms, and this is done in order to safeguard the security side of things. Trail of Bits is famous for its high-profile work, such as the recent Worldcoin audit. This comprehensive audit echoes confidence in the safety of the token by ensuring that the smart contract of kBTC is free from vulnerabilities.
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kBTC Integrates with Major DeFi protocols for Instant Liquidity
Upon launch, kBTC will be compatible with a subset of the major DeFi protocols, such as Paraswap, Yearn, Curve and Velodrome. That means kBTC holders will be able to use their wrapped Bitcoin to provide liquidity on decentralized exchanges or yield farm platforms almost instantly.
But Kraken said there would be no spot markets for kBTC at launch. While users who want to trade Bitcoin will still have to redeem kBTC for the underlying BTC and trade the original asset, this action is automated when users move their BTC from the kBTC wallet.
For kBTC on both Ethereum and OP Mainnet, the minimum deposit has been determined to be 0.00026 BTC, equivalent to $15 if Bitcoin is $60,000. This lower minimum also means that more people can access DeFi, including those who haven’t been able to participate in the world of decentralized financial systems before because of the high minimum.
kBTC is among the latest moves by Kraken to compete in the wrapped BTC space as competition rises. Wrapped Bitcoin (WBTC), which was launched in 2019, now stands as one of the biggest wrapped tokens with a market capitalization of around $10 billion. However, WBTC’s recent partnership with Tron founder Justin Sun has sparked worries about the centralization of the asset and has opened the way for newcomers like Kraken to enter the market more transparently.
cbBTC is a Coinbase launched wrapped BTC increasing competition in wrapped BTC. kBTC is planned to expand into non EVM networks, which will further extend the utility of BTC within decentralized applications.
Conclusion
The launch by Kraken of kBTC makes this an important milestone in making Bitcoin more prevalent in DeFi, offering security, transparency, and interoperability. Combined with competition in the wrapped BTC space, Kraken’s intention to push beyond wrapped Bitcoin on Ethereum networks will further increase Bitcoin’s utility in decentralized finance applications overall.
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