Crypto exchange Kraken said on Wednesday that it is rolling out a new Bitcoin Vault product that allows users to earn up to 2.5% in bitcoin rewards while still maintaining exposure to BTC price moves.
The product, launched under the exchange's Kraken Earn lineup, is aimed at bitcoin holders who want passive yield without needing to interact with risky decentralized finance protocols or otherwise move their funds off the regulated exchange.
Bitcoin Vault, powered by DeFi infrastructure provider Veda, allocates funds across onchain lending protocols like Aave, Morpho, and Tydro, where users borrow assets and pay interest back to depositors as yield.
Unlike proof-of-stake tokens like ETH or SOL that can generate staking rewards, (BTC) has no native yield mechanism. This has led exchanges and protocols to develop alternative bitcoin-earning products.
"Many Bitcoin holders on Kraken have made it clear they want simple ways to earn on the Bitcoin they already plan to hold," Kraken Director of Product for Earn & Trade John Zettler said in a statement. "Bitcoin Vault is built for that mindset."
It builds on Kraken's DeFi Earn initiative, unveiled earlier this year, which includes staking, Auto Earn, and DeFi-focused vault products.
Kraken said demand for these simpler yield products has grown in the first half of the year, noting that its USDC Vaults product has already seen nearly $250 million in asset deposits through what it described as "organic, zero-incentive growth."