- Cardano has officially launched Cardinal, its pioneering decentralized finance protocol designed for Bitcoin users.
- This innovative protocol, unveiled by founder Charles Hoskinson, leverages wrapped Bitcoin UTXOs and the secure MuSig2 multi-signature system to provide a trust-minimized bridge for Bitcoin liquidity into the Cardano ecosystem.
Cardano founder Charles Hoskinson revealed the launch of Cardinal, Cardano’s first native DeFi protocol tailored specifically for Bitcoin users.
The news, shared by Hoskinson on June 9 via X, marks a significant stride in Cardano’s ambition to become a leading platform for Bitcoin-native applications, opening up a wealth of opportunities for Bitcoin holders.
Welcome to the first Bitcoin DeFi protocol developed for Cardano https://t.co/CoYvrYnIfI
— Charles Hoskinson (@IOHK_Charles) June 9, 2025
Developed by Input Output (IO), the innovative research and development team behind the Cardano blockchain, Cardinal empowers Bitcoin holders to engage in a full spectrum of DeFi services.
This includes lending, staking, and borrowing, all without the need for traditional custodians or the often-centralized bridges that have characterized previous cross-chain solutions.
This trust-minimized approach is a game-changer, promising enhanced security and greater user control over assets.
Cardinal’s core functionality revolves around wrapping Bitcoin’s unspent transaction outputs (UTXOs). These UTXOs, which fundamentally represent Bitcoin ownership, are converted into wrapped tokens within the Cardinal protocol.
Crucially, these wrapped tokens maintain a strict 1:1 peg with Bitcoin, ensuring users can redeem their original BTC at any time through a secure, fraud-resistant process.
What truly sets Cardinal apart from existing wrapped Bitcoin solutions is its deeply trust-minimized architecture. Unlike schemes that rely on central custodians or federated systems, Cardinal ingeniously employs MuSig2, a sophisticated cryptographic multi-signature system.
MuSig2 enables multiple parties to sign transactions collectively, ensuring that the original Bitcoin remains securely locked on its native chain. The brilliance of this system lies in its resilience: it operates securely even if only one participant remains honest, significantly bolstering the protocol’s integrity and resistance to malicious actors.
Furthermore, Cardinal meticulously addresses the contentious issue of rehypothecation. In traditional finance and even some crypto systems, rehypothecation allows custodians to reuse user assets, often without explicit transparency. Cardinal proactively prevents this by affording users complete and continuous control over their assets while preserving the integrity of their original Bitcoin.
Beyond its innovative wrapping and security features, Cardinal integrates BitVMX, an off-chain execution system. BitVMX is instrumental in maintaining decentralization while facilitating complex Bitcoin operations.
This off-chain capability, combined with the power of Cardano smart contracts and Bitcoin’s inherent scripting capabilities, enables seamless and secure asset transfers between the two networks.
The project garnered significant attention during a live demonstration at the recent Bitcoin 2025 conference, where Input Output showcased a groundbreaking bridgeless BTC-to-Cardano transfer using BitVMX.
This public display underscored Cardano’s commitment to fostering a truly interoperable ecosystem for Bitcoin.
While Cardano’s DeFi Total Value Locked (TVL) has seen a recent dip, declining from a peak of $415 million in May to approximately $334 million by June 10, the team holds high hopes for Cardinal.
By offering Bitcoin holders an unprecedented, custodian-free pathway to utilize their assets within a robust DeFi environment without ever fully leaving the Bitcoin ecosystem, Cardinal is poised to attract substantial new liquidity and further solidify Cardano’s position as a vibrant hub for decentralized finance.
CTO Romain Pellerin further emphasized Cardinal’s design for interoperability, highlighting its ability to seamlessly integrate with major blockchain networks such as Ethereum, Solana, and Avalanche, amplifying its potential for cross-chain asset management and yield farming.