San Francisco-based crypto exchange Kraken announced the launch of its Wrapped Bitcoin token, kBTC. The exchange said the ERC-20 token is backed 1:1 by Bitcoin and is currently available on both OP Mainnet (formerly Optimism) and the Ethereum network.
Why Launch kBTC?
Kraken noted that its latest innovation, kBTC, represents a significant leap forward in the global adoption of crypto. By wrapping Bitcoin in an ERC-20 token, Kraken wants to unlock new possibilities for the world’s most valuable digital asset, leveraging its inherent strengths of security, scarcity, and store-of-value capabilities.
The official announcement further stated that kBTC extends Bitcoin’s utility into the decentralized finance (DeFi) ecosystem and beyond, enabling seamless interactions with DApps on OP Mainnet and Ethereum networks. The exchange believes the wrapped token will bridge the gap between Bitcoin and DeFi.
Kraken Assures kBTC Users
Kraken assured users that the kBTC can be trusted since it is backed 1:1 by an equivalent amount of BTC held securely in Kraken’s custody. This ensures that each token’s value is directly tied to the value of Bitcoin, providing a reliable and stable store of value.
The exchange also assured its users that they can inspect kBTC reserve on-chain at any time. To further boost security confidence, it claimed that the token is backed by Bitcoin held at Kraken Financial, a Wyoming-chartered Special Purpose Depository Institution (SPDI).
Kraken also stated that the kBTC ERC-20 smart contract has undergone evaluation by Trail of Bits, an external security auditing firm. It claimed the audit examined the codebase and client architecture, identifying and addressing potential security vulnerabilities.
The San Fransisco exchange also boasted 13+ years of industry custody experience and full-reserve practices. At launch, various DeFi platforms already support kBTC including deBridge, Definitive, Gauntlet, ParaSwap, and Yearn Finance. Kraken hopes to expand the token usage by deploying in other networks.
Wrapped BTC on the Rise
The wrapped bitcoin market is becoming increasingly crowded, with established players vying for dominance. Kraken’s launch of kBTC follows Coinbase’s introduction of cbBTC, its own wrapped bitcoin on Ethereum and Base.
The two exchanges now compete with Bitgo, the founders of Wrapped Bitcoin (WBTC), the largest tokenized BTC product with a market cap of $10 billion. As the wrapped bitcoin market continues to grow, crypto users are keen to see how these players will innovate to expand crypto adoption.
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