Cardano Just Pulled a DeFi Power Move—Bitcoin’s Playing on Its Turf Now

Charles Hoskinson’s latest bombshell bridges Bitcoin’s liquidity into Cardano’s DeFi ecosystem—no middlemen, no legacy baggage. Here’s why it matters.

The Collision of Titans

Bitcoin’s $1.3 trillion market cap meets Cardano’s proof-of-stake efficiency in a move that could rewrite decentralized finance rules. Suddenly, ADA isn’t just another altcoin—it’s the rail for BTC’s DeFi future.

How It Works (Without the Jargon)

Wrapped BTC goes cross-chain via Cardano’s new interoperability protocol. Think of it as Bitcoin putting on a spacesuit to visit DeFi planets—except the spacesuit is mathematically bulletproof.

The Cynical Take

Wall Street’s still trying to mint ‘Bitcoin ETFs’ while crypto builders are out here creating actual utility. Somewhere, a Goldman Sachs VP just spilled their $8 oat milk latte.

Game on.

TLDR

• Charles Hoskinson announced the launch of Cardinal Protocol as the first Bitcoin DeFi solution on Cardano.
• The protocol allows users to wrap Bitcoin UTXOs and convert them into DeFi-compatible assets.
• Cardinal enables decentralized lending, borrowing, and staking without custodians or rehypothecation.
• Wrapped UTXOs are pegged 1:1 and can be transferred or burned to redeem the original Bitcoin.
• Cardinal uses MuSig2 multisignature technology to secure locked Bitcoin assets.

Cardano founder Charles Hoskinson has introduced the Cardinal Protocol, marking the first Bitcoin DeFi solution on the Cardano blockchain. The protocol enables Bitcoin to operate in decentralized finance by creating Wrapped Bitcoin assets from UTXOs. This breakthrough allows lending, borrowing, and staking without needing custodians or centralized entities.

Cardinal’s design centers around Wrapped UTXO, which lets users convert Bitcoin UTXOs into assets like tokens or NFTs. These wrapped assets are pegged 1:1, transferable on-chain, and burnable to release the original Bitcoin or Ordinals. This mechanism ensures full control while enabling Bitcoin usage in smart contract environments.

Welcome to the first Bitcoin DeFi protocol developed for Cardano https://t.co/CoYvrYnIfI

— Charles Hoskinson (@IOHK_Charles) June 9, 2025

Romain Pellerin, CTO at Input Output HK, detailed the protocol’s framework, emphasizing security and cross-chain interoperability. Cardinal supports integration with multiple networks, including Ethereum, Solana, and Avalanche. Its structure does not rely on rehypothecation, reducing security risks and enhancing reliability.

Bitcoin DeFi Gets Boost from Cardinal Protocol

The protocol uses the extended UTXO model, which resembles Bitcoin’s but includes advanced smart contract support. This similarity allows seamless conversion of bitcoin UTXOs into wrapped assets compatible with Cardano’s infrastructure. As a result, users can securely utilize Bitcoin across multiple decentralized finance platforms.

🧵1/ Introducing Cardinal Protocol 🟧

A new primitive for Bitcoin:
→ Wrap any BTC UTXO
→ Find DeFi yield with it: lending, staking, borrowing
→ Trust-minimized (1-of-n honest operator)

We made history with the 1st cross-chain Ordinal wrap!

📜 https://t.co/DKT10LsrwA

— Romain Pellerin🇫🇷🇺🇸 (@rom1_pellerin) June 9, 2025

Cardinal’s implementation of MuSig2 enhances the security of locked Bitcoin using aggregated multisignatures. Wrapped UTXOs can be redeemed anytime via fraud-proofed peg-out, eliminating risks associated with traditional wrapped Bitcoin models. The absence of custodians and federations ensures a trust-minimized system.

BitVMX supports verifiable off-chain execution for all wrapped transactions under Cardinal. Combined with Bitcoin HTLCs and cardano smart contracts, this framework supports peg-in/peg-out operations and asset ownership transfers. These features position Cardinal as a fully interoperable and decentralized Bitcoin DeFi protocol.

Ordinals Now Active in DeFi with Cardinal

The protocol also introduces a trust-minimized bridge for Ordinary Coins from Bitcoin to the Cardano mainnet. This system enables Ordinary Coins to function as collateral, be borrowed or lent, or be auctioned across chains. Each transaction is verifiable, maintaining full transparency and traceability.

Cardinal extends the utility of Ordinals beyond storage by integrating them with decentralized exchanges like MinswapDEX and SundaeSwap. Users can now farm or trade Ordinals while preserving their provenance and security. This evolution makes Bitcoin assets more dynamic in DeFi applications.

Pellerin has outlined plans to integrate zero-knowledge technology and recursive state proofs to improve scalability and security. Future upgrades include liquidity provider systems for fungible tokens and wallet integration.