Kraken Launches Bitcoin Vault Product for Users to Earn Yield

Kraken has launched a new Bitcoin vault product that allows users to earn a 2.5% annual yield on their holdings, responding to growing demand for passive income options among long-term Bitcoin investors.

The product, called Kraken Earn BTC Vault, was introduced on May 28 with support from crypto yield infrastructure provider Veda. The company said the service is designed to make Bitcoin yield generation easier by removing the technical challenges often linked with wrapping Bitcoin, transferring assets or managing multiple crypto wallets.

Kraken Earn product director John Zettler said many Bitcoin holders on the platform had been asking for a simple way to earn rewards on Bitcoin they already planned to hold for the long term.

Bitcoin Vault Attracts $30 Million in Early Deposits

The product saw strong early interest from investors. Within 10 hours of launch, Veda said the Bitcoin vault attracted more than $30 million worth of Bitcoin deposits from around 4,000 unique wallets.

Bitcoin yield products have remained limited in the crypto market because the Bitcoin blockchain does not naturally support yield generation like networks such as Ethereum and Solana.

How Kraken Bitcoin Vault Works

Kraken’s vault generates returns by converting Bitcoin into Kraken Wrapped Bitcoin (kBTC), a token designed to mirror Bitcoin’s value. Crypto platform Sentora then allocates those assets across lending protocols including Aave, Morpho and Tydro to generate rewards.

The product is non-custodial, meaning users keep control of withdrawals and transfers. Withdrawals may take up to five days to process, while service providers charge a 25% performance fee on rewards earned.