Kraken Clients Earned $100 Million in Staking Rewards in First Half of 2021

Staking on track to become a $40 billion business by 2025, as JPMorgan report recently estimated


Blockworks exclusive art by Axel Rangel


key takeaways

  • Assets staked on Kraken year to date has jumped from $1 billion to nearly $5 billion
  • Staking could make the cryptocurrency marketplace increasingly attractive relative to other asset classes, according to JPMorgan analysts

Kraken paid out more than $100 million in staking rewards to customers in the first half of 2021, the crypto exchange reported Monday, as analysts predict the staking industry is expected to boom in the next several years.

Proof-of-work coins like Bitcoin are generated by using machines competing to solve complex equations to mine coins and digital assets. But proof of stake works differently by choosing from a pool of people holding a coin, giving these validators a source of income without needing powerful mining hardware.

Staking allows users to maximize holdings in staking coins and fiat that would otherwise be sitting in a Kraken account, the firm explains. A person can earn rewards — which Kraken pays out twice a week — on top of their holdings and grow them further by compounding those future rewards. 

Year to date, the total number of assets staked on Kraken has jumped from $1 billion to nearly $5 billion, the firm announced, as clients look for new, innovative ways to earn rewards on their crypto wealth.

“Being a successful crypto exchange is no longer just about being a trading platform, it’s about offering a range of products and services so clients can leverage their crypto wealth more effectively,” Kraken Chief Product Officer Jeremy Welch said in a statement. “With $100 million in rewards now paid out to clients, Kraken is doubling down on its staking service to make it one of the most comprehensive offerings in the space.”

The first-half statistics come a few weeks after the release of a report by JPMorgan, which noted that staking is becoming a growing revenue stream for cryptocurrency intermediaries amid concerns about the energy consumption needed to mine bitcoin and other proof-of-work tokens.

JPMorgan analysts estimate that staking is currently generating $9 billion of revenue for the crypto economy and will grow to $20 billion following the Ethereum merge set for later this year. It could get to $40 billion by 2025 should proof-of-stake grow to the dominant protocol, it adds.

“We think staking will make the cryptocurrency marketplace increasingly attractive relative to other asset classes, yield-generating or not,” the JPMorgan research note states. “Not only does staking lower the opportunity cost of holding cryptocurrencies versus other asset classes, but in many cases cryptocurrencies pay a significant nominal and real yield. As the volatility of cryptocurrencies falls, we see the ability to earn a positive real return as one of the factors driving the cryptocurrency market to become more mainstream.”

Earlier this month, CoinFund and ParaFi Capital co-led a $5.2 million funding round for crypto staking platform ClayStack. The company said that the funding would help ClayStack build a secure and open platform to redefine the current staking ecosystem.

A week prior to the fundraising, digital asset lending company Celsius revealed that it would launch an Ethereum 2.0 (ETH2) staking pool service.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg


Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.


Heron Finance caters to US accredited investors and uses Goldfinch credit markets on the backend


Bitcoin, up more than 160% year to date, has plenty of steam left in this rally, analysts say


Nova Labs will hope to grow Helium’s hotspot network to reduce backup coverage costs paid to T-Mobile


The LinkedIn posting states that the position would “support the Federal Reserve System’s [CBDC] Research and Development program.”


Both central banks are exploring the impact a CBDC could have on an economy


Neutron core contributor Dutheil notes this is “a period of consolidation” in the Cosmos ecosystem