Kraken has announced the launch of its Bitcoin interest-bearing product, "Bitcoin Vault." The company disclosed that users can transfer their held BTC into the vault to earn up to a 2.5% annualized return denominated in Bitcoin, with rewards automatically credited to their Kraken account.
Funds enter an on-chain lending protocol
According to Kraken’s guidelines, BTC deposited into the vault will be placed into an on-chain vault powered by DeFi infrastructure company Veda, with strategy risk management and execution handled by the institutional-grade DeFi firm Sentora.
The related funds will be used for on-chain lending and borrowing strategies, involving protocols such as Aave, Morpho, and Tydro. Kraken states that the yields come from these on-chain strategies themselves, not from token subsidies or short-term promotional rates.
Earnings have been included in the performance share.
Kraken states that the service provider takes a 25% performance fee from the earnings, but the maximum annualized yield of 2.5% displayed on the platform already includes this fee. This means the estimated yield users see is after the relevant performance fee has been deducted.
- Maximum estimated annual return: 2.5%
- Rewards are denominated in BTC and accumulate automatically.
- Withdrawal processing time is approximately 5 days.
Withdrawals require a 5-day waiting period.
Kraken states that users can initiate withdrawal requests at any time, but fund returns are not immediate and require approximately five days for processing and return. This means that, while not subject to long-term lock-up, the liquidity of this product is still lower than that of a standard spot account.
These centralized platform yield products have previously drawn regulatory attention. Previously, Gemini Earn ceased operations following the FTX crisis and came under scrutiny over issues with risk disclosure. Even earlier, BlockFi’s high-yield crypto lending products were investigated by U.S. regulators.
Additional information: Aave and Morpho, mentioned in the article, are both leading on-chain lending protocols. Kraken is now directly connecting its centralized exchange account interface with on-chain yield strategies, lowering the barrier for users to interact with DeFi.