Decentralized Finance (DeFi) based on Bitcoin is being introduced to the Cardano platform via the Cardinal Protocol.

Decentralized Finance (DeFi) based on Bitcoin is being introduced to the Cardano platform via the Cardinal Protocol.

In a groundbreaking move, Cardinal Protocol, the first DeFi protocol for Bitcoin specifically developed for the Cardano ecosystem, is set to transform the way Bitcoin interacts with decentralized finance (DeFi).

Cardinal Protocol enables Bitcoin holders to use their BTC within the Cardano ecosystem without relinquishing control of their Bitcoin assets. This is made possible through advanced cryptographic techniques such as MuSig2, a multisignature signature aggregation technology that enhances security and interoperability.

The core purpose of Cardinal is to bridge Bitcoin and Cardano in a secure, decentralized way without relying on traditional, potentially risky cross-chain bridges. Instead, it uses the shared UTXO model and zero-knowledge proofs to safely move wrapped Bitcoin assets into Cardano DeFi and back, opening access to over $1.5 trillion of Bitcoin liquidity for Cardano users.

At Consensus 2025 in Toronto, Cardinal demonstrated live Bitcoin transfer through Cardano’s network using this technology, confirming its operational capability.

Cardinal Protocol represents a superior solution to traditional Bitcoin wrapped modes like WBTC, as it keeps the original BTC locked under a MuSig2 scheme without rehypothecation. This means that users can now participate in decentralized lending, staking, and managing Ordinals directly on the Cardano blockchain.

With Cardinal Protocol, Bitcoin and Cardano are now united, creating a more inclusive and advanced financial ecosystem. This innovation expands Bitcoin's functionalities and overlays its strengths with Cardano's programmable and dynamic capabilities.

Cardinal Protocol is part of Cardano's broader push for privacy, scalability, and cross-chain interoperability, complementing other innovations like the Midnight privacy sidechain and Hydra scaling solutions. As such, it marks a before and after for Bitcoin in the DeFi universe, offering users the possibility of using their BTC on-chain and with full autonomy.

The new opportunities opened up by Cardinal Protocol could be the driving force behind the next generation of the crypto ecosystem, boosting Bitcoin's liquidity and utility, expanding the space for new financial products combining security, decentralization, and advanced functionality. However, as with all cryptoassets, investing in Bitcoin carries a high level of risk and may not be suitable for retail investors due to its volatility.

[1] Cardano Daily (2023). Cardinal Protocol Demonstrates Live Bitcoin Transfer on Cardano at Consensus 2025. Retrieved from https://cardano-daily.com/cardinal-protocol-demonstrates-live-bitcoin-transfer-on-cardano-at-consensus-2025/

[4] Cardano Foundation (2023). Cardinal Protocol: A Pioneering Proposal for Bitcoin DeFi on Cardano. Retrieved from https://cardano.org/en/news/cardinal-protocol-a-pioneering-proposal-for-bitcoin-defi-on-cardano/

1. Through the innovation of Cardinal Protocol, Bitcoin holders can now invest their BTC in decentralized finance (DeFi) opportunities within the Cardano ecosystem, leveraging technology to bridge the gap between the two blockchains.
2. By using advanced technologies like MuSig2 and zero-knowledge proofs, Cardinal Protocol allows Bitcoin investors to participate in decentralized lending, staking, and managing Ordinals directly on the Cardano blockchain, expanding the functionalities of Bitcoin while ensuring full autonomy of their assets.

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