Kraken's New Bitcoin Vaults Allow Users to Earn Yield Through Lending Strategies

San Francisco-based cryptocurrency exchange Kraken has introduced a new feature, Bitcoin Vaults, which enables users to generate income on their BTC holdings through lending strategies.

The platform claims that users can earn up to 2.5% APY in Bitcoin-denominated rewards by locking their funds into the vaults. The rewards are based on on-chain lending and borrowing strategies executed using well-known protocols such as Aave, Morpho, and Tydro.

The exchange has partnered with DeFi infrastructure firm Veda and institutional DeFi firm Sentora to power its Bitcoin Vaults. The providers will take a 25% performance fee from the rewards, which is factored into the projected yield of up to 2.5% APY.

Withdrawals from the vaults are subject to a five-day processing and return wait, but users can remove their funds at any time. Kraken emphasizes that its yield-bearing product comes directly from on-chain strategies and does not rely on token subsidies or promo rates.