• Staked enables investors in proof-of-stake networks to easily and securely compound their holdings
  • Large industry players will continue building out capabilities through acquisitions to ensure competitiveness, according to Ryan McCulloch, investment banking associate at M&A advisory firm Architect Partners

Kraken has acquired staking platform Staked as a way to expand its number of supported networks and enable a non-custodial alternative to the company’s existing custodial staking service.

Staked enables investors in proof-of-stake networks to easily and securely compound their holdings, according to Kraken’s acquisition announcement on Tuesday. The company did not disclose the sum of money it paid for the staking platform.

“We are excited to add Staked to our portfolio of yield products, which has seen great uptake by a growing population of crypto investors,” Kraken Co-founder and CEO Jesse Powell said in a statement. “Staked is highly complementary to our existing staking business and will allow us to further strengthen our product offering through world-class infrastructure for clients who prefer to retain custody of their staked assets.”

Kraken’s buy of Staked is its fifth acquisition in 2021, according to the company. Its client base, which totals about 8.5 million, trades more than 90 digital assets and 7 different fiat currencies globally.

As a provider of security, access and service for digital assets on its platform, Kraken noted in a blog post that the company does not believe in “not your keys, not your coins.”

“But, we do respect and support our clients who do – and their right to retain custody over their crypto,” the post states. 

A Kraken spokesperson did not immediately return Blockworks’ request for further comment.

The market capitalization of the top 30 proof-of-stake assets reached an all-time high of $594 billion during the third quarter, according to a report by Staked, which was a 65% increase from the prior quarter. 

“Kraken clearly shares our commitment to supporting proof-of-stake networks, having a security-first mindset, and unwavering focus on customer experience, which makes them an ideal partner,” Staked CEO Tim Ogilvie said in a statement. “Combining our businesses will enable us to provide a more seamless experience and expand our product offering to meet our clients’ needs in staking and beyond.”

Staying competitive

About $100 million in rewards had been paid out to Kraken’s clients in the first half of 2021. The total number of assets staked on Kraken had reached $10.8 billion, as of Sept. 20, and Kraken Chief Product Officer Jeremy Welch told Blockworks at the time that the company shifted its focus on professional traders and institutions to bringing a full offering directly to consumers.   

Kraken launched its staking service last year, which allows users to earn rewards — which Kraken pays out twice a week — on top of their holdings and grow them further by compounding those future rewards.

Ryan McCulloch, an investment banking associate at M&A advisory firm Architect Partners, said that proof-of-stake blockchain protocols are gaining prominence and will likely continue to do so with the transition of Ethereum from proof-of-work to proof-of-stake.

“Users and token holders of these proof-of-stake blockchains have a clear financial incentive to participate in running the respective blockchain,” he told Blockworks. “Kraken, and other crypto-asset financial services firms, must offer this capability to their clients, both individuals and institutions.”

The deal follows Kraken competitor Coinbase’s acquisition earlier this year of Bison Trails, which McCulloch called a “highly comparable” staking and blockchain infrastructure company to Staked.

Emilie Choi, the company’s president and chief operating officer, said during a webinar at the Bloomberg Financial Innovation Summit last week that Coinbase would try to acquire “incredible” companies it sees in the space. 

“This transaction demonstrates the need for large crypto exchanges to own the infrastructure layer of the blockchain and provide a broad array of services to satisfy the needs of retail and institutional investors,” McCulloch said of Kraken’s latest deal. “Large players such as Coinbase, Kraken [and] Binance will continue to acquire and build out their capabilities to ensure competitiveness.” 

Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.

  • Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]