Crypto exchange Kraken has launched Bitcoin Vault, a non-custodial earning product designed to let long-term Bitcoin (BTC) holders generate passive yield directly from their accounts. The automated strategy offers up to a 2.5% annualized, BTC-denominated return. Market demand for the vehicle was immediate, with infrastructure provider Veda reporting over $30 million worth of Bitcoin deposited from 4,000 unique wallets within the first 10 hours of Wednesday’s rollout.
The product targets a structural limitation inherent to the Bitcoin blockchain. Unlike proof-of-stake networks like Ethereum or Solana, Bitcoin lacks native smart-contract mechanisms to generate yield. Historically, this forced holders to navigate complex decentralized finance (DeFi) workflows, such as manually wrapping assets or managing external Web3 wallets, to earn rewards on idle balances.
To streamline this process, Kraken partnered with on-chain infrastructure provider Veda and risk-management platform Sentora. When a user allocates funds, the system automatically swaps the native asset into Kraken Wrapped Bitcoin (kBTC)—a token pegged to Bitcoin’s spot price. Sentora then routes this liquidity into established decentralized lending protocols, including Aave, Morpho, and Tydro, where yield is generated via borrower demand.
Because the underlying framework is entirely non-custodial, depositors retain ultimate ownership, meaning only the originating wallet can authorize withdrawals or asset transfers. However, participants should note specific liquidity conditions: de-allocations carry an estimated five-day processing window, and the platform service providers assess a 25% performance fee applied directly to accrued rewards. The Bitcoin Vault follows the organic expansion of Kraken’s stablecoin yield products launched in January, which have accumulated over $245 million in total deposits.
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