Introducing $kBTC – an ERC-20 token fully backed 1:1 by Bitcoin, held securely by Kraken and always verifiable onchain. More possibilities. More functionality. More transparency. Let's take a closer look

The Kraken crypto exchange has introduced its own token called Kraken Wrapped Bitcoin (kBTC). Each kBTC is backed 1:1 by Bitcoin held at Kraken Financial

Kraken crypto exchange has introduced its own token called Kraken Wrapped Bitcoin (kBTC). Each kBTC is backed 1:1 by Bitcoin that is held by Kraken Financial, a Wyoming-chartered financial institution. This means that for every kBTC that is issued, there is one real Bitcoin that is stored by Kraken.

The token is built on the ERC-20 standard and is designed to work on both the Ethereum network and OP Mainnet (formerly known as Optimism), according to a press release on Oct. 17.

“With kBTC, we’re bringing the power of Bitcoin to new networks, underpinned by the trust and security expertise Kraken has established over the last decade,” Kraken said in the press release.

The wrapped Bitcoin will allow users to use their Bitcoin in decentralized applications (DApps) that normally don’t support Bitcoin.

Kraken has also made on-chain data available for public inspection to ensure transparency. Users can check the kBTC reserves by viewing the custody address and smart contracts for both Ethereum and OP Mainnet.

Kraken also said that it hired Trail of Bits, a security firm, to audit the smart contract, and the token passed all tests.

Wrapped tokens like kBTC allow assets to be used across multiple blockchains, which improves interoperability in decentralized finance (DeFi). For example, kBTC can be used on Ethereum to trade, lend, or borrow Bitcoin on various DeFi platforms.

At the time of launch, Kraken will not support any spot markets for kBTC, but users will be able to redeem the token for actual Bitcoin at any time.

The exchange will integrate kBTC with major DeFi protocols, including Yearn, Curve, Paraswap, and others. Additionally, Kraken set the minimum deposit for kBTC at 0.00026 BTC, which is roughly $15 at current prices.