What is Ink? Kraken’s Ethereum layer-2 blockchain

An exchange steps onchain

For most of its history, one of crypto’s largest and oldest exchanges kept its business firmly off the blockchain. Customers bought and sold coins inside a familiar app, while the wider world of decentralized finance stayed a separate, and often intimidating, place. Ink is the bridge that closes that gap: a blockchain designed to bring a big centralized user base into DeFi with as little friction as possible.

Think of it like a bank that spent years running only its own branches, then opened a gateway to the entire open financial internet using rails it built itself. That idea says a lot about where large crypto companies believe the industry is heading.

Ink at a glance

Ink is an Ethereum Layer 2 (L2) blockchain created and incubated by Kraken, the US exchange founded in 2011. A Layer 2 is a separate chain that processes transactions cheaply and quickly, then settles the results back to a main chain for security. Ink handles the fast, low-cost activity and leans on Ethereum for final settlement.

It is built on the OP Stack, the open-source software behind Optimism, and it belongs to the Superchain: a group of chains that share standards and can move value between one another more easily than isolated networks. Ink positions itself narrowly and deliberately as a home for onchain capital markets, meaning lending, trading, yield, and structured products rather than a general-purpose chain for every use case.

How Ink came to be

Kraken announced Ink on October 24, 2024, framing it as its long-awaited step onchain. The mainnet went live in December 2024, months ahead of the original schedule, and reportedly processed more than a million transactions in its first day. In January 2025 Ink became one of the first Superchain networks beyond Optimism’s own mainnet to reach a meaningful stage of decentralization.

A separate nonprofit, the Ink Foundation, was set up to steward the ecosystem and issue the network’s token. Keeping token distribution at arm’s length from the exchange is a deliberate design choice, intended to reduce the appearance of a single company controlling both the chain and its economics.

How does Ink work?

Ink is an optimistic rollup. That name describes both how it scales and how it stays honest.

Optimistic rollups and settlement

Ink bundles many transactions off the main chain, then posts a compressed record of them to Ethereum. The network optimistically assumes those transactions are valid, which is why it is fast. A challenge window then lets anyone submit a fault proof to dispute an incorrect result. Ink launched with permissionless fault proofs and more than one independent challenger, a stronger safeguard than many young rollups start with. The trade-off is that moving funds directly back to Ethereum can take several days while that window runs, though third-party bridges offer faster exits.

Speed, fees, and the sequencer

Blocks arrive about once per second, with even faster times in development, and gas is paid in ETH rather than a proprietary token. Average fees sit below a cent. Because the chain uses the OP Stack, it is fully compatible with Ethereum tooling, so existing smart contracts deploy without changes. For a plain-language walkthrough of the same rollup approach, see our explainer on Optimism as an Ethereum Layer 2. In Ink’s early phase, Kraken runs the sequencer that orders transactions, with a stated plan to decentralize that role over time.

The Ink ecosystem

A chain is only as useful as the apps running on it, and Ink launched with a focused set aimed squarely at finance. Nado is an in-house exchange built by Kraken that combines spot trading, perpetuals, and money markets in one order-book interface. Tydro is Ink’s lending and borrowing market, built as a white-label version of the well-known Aave protocol, supporting assets such as wrapped ETH, wrapped Bitcoin, and several stablecoins.

Around these sit familiar DeFi names, including the Velodrome liquidity hub, along with cross-chain messaging and oracle integrations. Kraken exchange users can also withdraw ETH straight onto Ink, and an aggregated bridge lets users move assets in from Ethereum and other chains through several providers. Beyond the core protocols, a growing number of tokens are issued directly on the Ink chain, from stablecoins to project tokens.

The INK token

In June 2025 the Ink Foundation confirmed a native token, INK, reversing an earlier tokenless stance. Its supply is permanently capped at one billion units, a limit the Foundation says cannot be raised through governance. Notably, INK is described as a utility token for coordinating liquidity and rewarding activity, not a governance token for the chain itself, since governance stays within the Superchain framework.

The distribution follows a liquidity-first philosophy. Rather than selling a speculative token and building products later, the Foundation anchored INK to working apps, then rewarded genuine early users through an airdrop. Signals that counted toward eligibility included bridging assets, trading on Nado, and supplying liquidity on Tydro, with filters intended to screen out airdrop farming.

Advantages of Ink

• Backing from an established exchange with a large existing user base to onboard into DeFi.
• Low, predictable fees and roughly one-second blocks, which suit active trading and lending.
• Security anchored to Ethereum rather than a brand-new validator set of its own.
• Stronger-than-typical decentralization for a young chain, with permissionless fault proofs and multiple challengers.
• Superchain membership, making it easier to move liquidity to and from other connected chains.

Risks and limitations

• A single sequencer run by Kraken currently orders transactions, a centralization point until that role is opened up.
• Native withdrawals to Ethereum can take several days because of the optimistic challenge window.
• Intense competition from larger Layer 2 networks that already handle the bulk of onchain activity.
• Early activity is concentrated in a few apps and may partly reflect airdrop incentives rather than durable demand.
• Close ties to one exchange mean Ink’s fortunes are linked to Kraken’s health, strategy, and regulatory standing.

Ink vs other exchange chains

Ink is part of a clear trend: major exchanges building their own blockchains rather than renting someone else’s. The closest comparison is Base, the chain from rival exchange Coinbase, which launched earlier and is far larger. Both run on the OP Stack and pay gas in ETH, but Ink is younger, more tightly focused on DeFi, and, unlike Base, comes with its own token.

Against the large general-purpose networks like Arbitrum and Optimism, Ink trades breadth for a narrower, finance-first identity. Whether that specialization becomes an advantage or a limitation is one of the more interesting open questions about the chain.

Why Ink matters

In its first year Ink grew from a standing start to hundreds of millions of dollars in value across its apps, a rapid climb driven by its trading and lending markets and by users positioning for the token airdrop. That momentum makes it one of the more watched newer entrants, even as it remains small next to the established leaders.

The bigger story is what Ink represents. When an exchange that spent more than a decade off the blockchain builds and runs its own chain, it signals a belief that the future of the business runs partly onchain. The open questions now are whether activity holds up once airdrop incentives fade, how quickly the network decentralizes its sequencer, and whether a specialized DeFi chain can carve out lasting space in a crowded field. Either way, Ink is a clear early example of exchanges shifting from simply listing coins to owning the rails beneath them.