Kraken has launched Bitcoin Vault, a new Kraken Earn product built for BTC holders who want yield without selling their Bitcoin or manually moving assets across DeFi protocols.
The Bitcoin Vault lets eligible users earn rewards denominated in BTC while keeping exposure to Bitcoin’s price. The product sits inside Kraken Earn and is aimed at long-term holders who already plan to keep BTC on the platform but want a more automated route into onchain lending strategies.
The structure uses Kraken’s DeFi Earn stack rather than traditional exchange lending. When a user allocates BTC to the vault, the asset is wrapped into kBTC and moved to an embedded wallet on the Ink network. From there, it enters a Veda-administered vault managed by Sentora, with capital deployed across DeFi protocols including Aave, Morpho and Tydro.
That design gives Kraken a cleaner way to package Bitcoin yield than the centralized lending products that collapsed across the industry in 2022. Borrower demand, onchain lending activity and vault strategy performance drive rewards, while users avoid direct wallet management, bridging and protocol-by-protocol allocation.
DeFi Yield Access Comes With Real Risk
The launch expands Kraken’s broader DeFi Earn push, which has grown to more than $240 million in assets since January. Kraken’s DeFi Earn product page also makes the risk profile clear: APY is variable, not guaranteed, withdrawals can depend on protocol liquidity, and DeFi Earn is not a regulated financial product.
Bitcoin Vault adds another layer because the product can use leverage, wrapped assets and downstream exposure beyond the original BTC deposit. Kraken’s support details also state that vaults are not covered by government or bank protection programs and that users could lose some or all of their deposit.
That balance is the real story. Kraken is making Bitcoin-based DeFi yield easier to access, but easier access does not remove smart contract, liquidity, market, custody-wrapper or strategy risk. The launch lands only days after OpenZeppelin co-founder Manuel Aráoz warned that all of DeFi is unsafe because AI-assisted vulnerability discovery is changing the security equation.
The timing also fits Kraken’s wider BTC strategy. The exchange previously added Bitcoin staking through Babylon, showing that BTC yield products are moving from niche crypto-native tools into exchange interfaces. At the same time, the market’s security backdrop remains tense, with DeFi exploit losses reaching $816.9 million in 2026.
For Kraken, Bitcoin Vault turns idle BTC into a more active product category. For users, the tradeoff is sharper: BTC-denominated rewards now sit one click closer, but the yield still comes from DeFi infrastructure where liquidity, contracts and strategy execution carry risk.
