Kraken Launches Bitcoin Vault Yield Product Using Aave and DeFi

On May 27, Kraken launched its Bitcoin Vault within Kraken Earn, allowing users to earn BTC-denominated yield by deploying assets across Aave, Morpho, and Tydro while retaining spot exposure. The move follows Babylon Labs' May 20 unveiling of its Trustless Bitcoin Vault protocol, which targets a late-May public testnet and reduces peg-in times to three hours with over 3x lower fees. On May 25, Babylon filed a Temp Check for native BTC collateral integration on Aave V4, endorsed by founder Stani Kulechov and leveraging over $4 billion in staked BTC to bypass wrapped tokens and bridges. Kraken's DeFi Earn offering has grown to more than $240 million in assets since January.