Kraken Exchange Grows its Crypto Staking Business With Staked Acquisition

Kraken, a major American crypto exchange, has announced the acquisition of Staked, a non-custodial staking platform that enables investors to compound their holdings in digital assets issued on proof of stake blockchains.

The terms of the deal are not publicly disclosed, however, according to Kraken, it is “one of the largest deals in the history of crypto”.

“This acquisition perfectly complements our existing custodial staking offering, enabling all of our clients to earn rewards on their crypto while retaining complete control over their digital assets,” Kraken said in a statement.

Staking refers to the process of earning passive income on cryptocurrencies based on the proof of stake consensus mechanism. It involves users pledging their crypto assets to the network to help validate transactions and make it more secure.

In return, users get rewards, most often in the cryptocurrency they stake, with average yield rates varying depending on the network.

Data from Staking Rewards shows that most popular crypto assets for staking currently include Solana, Ethereum 2.0, Cardano, Terra, Avalanche, Polkadot, Binance Coin, Algorand, and Polygon.

A key feature of Kraken’s latest acquisition is that Staked offers non-custodial access to cryptocurrencies, meaning that users are in full control of their private keys.

According to Kraken, the exchange respects and supports its clients' right to retain custody over their crypto, even though this sometimes comes with trade-offs related to security.

“With this acquisition, our clients now have more options on how they choose to manage their funds when staking with Kraken,” added the firm.

Kraken’s history of acquisitions

Kraken, which earlier this year celebrated its 10th anniversary, has a long history of acquisitions, including the purchases of Swiss-based charting and trading terminal CryptoWatch in 2017, London-based financial services firm Crypto Facilities in 2018, and crypto markets data and intelligence firm CryptoFinance.ai in 2019.

According to Kraken, Staked is its fifth acquisition in 2021. The San Francisco-based exchange also said that so far this year its staking business grew by around 950% to nearly $16 billion.

Last week also saw the launch of Kraken Ventures, an independent investment fund led by Kraken alumni targeting early stage companies and protocols powering the next wave of crypto and fintech innovation.

Kraken Ventures’ areas of focus include financial infrastructure, Web3, decentralized finance (DeFi), and consumer crypto protocols, with Blockdaemon, Anchorage, Messari, Hashflow, Acala, and pStake among the firms to already receive financial backing from the fund.