Key Points
- Kraken has launched a wrapped version of Bitcoin, Kraken Wrapped Bitcoin (kBTC), on the Ethereum and Optimism networks.
- The kBTC is fully backed, verifiable on the blockchain, and can be swapped for Bitcoin’s on-chain asset at any time.
Kraken Introduces Wrapped Bitcoin on Ethereum and Optimism Networks
The US-based cryptocurrency exchange, Kraken, has introduced a wrapped version of Bitcoin (BTC) on the Ethereum network.
This new product, known as Kraken Wrapped Bitcoin (kBTC), will always be fully backed and verifiable on the blockchain.
Users of kBTC can swap the ERC-20 BTC version for Bitcoin’s on-chain asset anytime they want.
kBTC and Its Cross-Chain Compatibility
The kBTC is also a cross-chain compatible ERC-20 token and will be available on the Optimism network, a leading scaling solution on the Ethereum network.
Kraken plans to fully back the kBTC and store the coins on its custody platform for maximum security.
Kraken Financial, a Special Purpose Depository Institution (SPDI) chartered in Wyoming, will ensure the security of the Bitcoins used for the wrapping of the kBTC.
This means that kBTC can be used effortlessly across different decentralized financial (DeFi) ecosystems in the future.
Kraken has stated that using kBTC guarantees that it is backed 1:1 by Bitcoin, securely stored, and always accessible.
According to on-chain data, kBTC currently has a total market cap of $6.7 million, with 80 percent on the Ethereum network and the remaining amount wrapped on the Optimism network.
Kraken’s Commitment to Bitcoin’s Success
Kraken has significantly contributed to Bitcoin’s mainstream adoption in a regulated manner over the years.
As a leading cryptocurrency exchange, with over 760 crypto trading pairs, Kraken has a net daily traded volume of more than $630 million.
In the last quarter, Kraken reported a cumulative trading volume of approximately $207 billion.
Since its inception in 2011, Kraken has attracted over 10 million registered users, making it a significant player in mainstream crypto adoption.
Kraken is now aiming to enhance the utility of Bitcoin in the web3 space further.
The kBTC will play a vital role in managing the liquidity of Bitcoin and other digital assets.
However, some industry experts have raised security concerns about the adoption of wrapped versions of Bitcoin.
Moreover, the Wrapped versions of Bitcoin are highly centralized, which deviates from Satoshi Nakamoto’s original intention of creating a decentralized financial system.
Impact on the Market
The Bitcoin network is quickly adopting the DeFi space to compete with the altcoin industry.
At the time of writing, the Bitcoin network had a total value locked (TVL) of about $1.3 billion, from DeFi protocols such as SolvBTC LST, AILayer farm, and Lorenzo Protocol, among others.
The significant growth of the web3 space in the Bitcoin network has considerably contributed to its underlying value, which has regained the critical support level above $67k.
