Cardano Unveils Cardinal Protocol to Bring Bitcoin Liquidity into Cardano DeFi Ecosystem

Cardano has unveiled Cardinal, a new protocol designed to bring Bitcoin’s liquidity into its decentralized finance (DeFi) ecosystem. Announced by Input Output Global CTO Roman Pellerin and amplified by Cardano founder Charles Hoskinson, the launch marks a significant advancement in cross-chain interoperability between Bitcoin and Cardano.Trade Crypto on KrakenCardinal enables Bitcoin unspent transaction outputs (UTXOs) to be wrapped into 1:1 pegged tokens, which can be used for lending, staking, and borrowing on Cardano’s blockchain—without involving centralized custodians or traditional bridging mechanisms. By doing so, it opens up yield-generating DeFi opportunities to Bitcoin holders while maintaining strict asset security and decentralization.Unlike traditional bridge models that depend on a majority of honest operators, Cardinal introduces a trust-minimized framework, relying only on the honesty of at least one operator to ensure system integrity. The protocol implements MuSig2, a multi-signature cryptographic system that allows multiple parties to authorize a single Bitcoin transaction, thereby preventing unilateral access and enhancing security.🧵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/DKT10LsrwATo reduce the risk of chain reorganizations or transaction rollbacks on Bitcoin, Cardinal waits for a preset number of confirmations before executing any final steps. This safeguard ensures consistency and reduces vulnerability in cross-chain transfers.The wrapped BTC tokens can be burned at any time to redeem the original Bitcoin, providing a clear and secure path for asset return. Moreover, Cardinal’s integration of BitVMX—an off-chain computational system—enables advanced Bitcoin operations while preserving decentralization, ensuring compatibility with Cardano’s smart contract infrastructure.In addition to standard Bitcoin, Cardinal supports Bitcoin Ordinals—NFT-like digital artifacts inscribed on Bitcoin’s blockchain. These Ordinals can now be used as collateral in Cardano-based DeFi platforms, unlocking new possibilities for collectors and investors looking to leverage their assets in innovative ways.Although the current version is not deemed production-ready by its developers, Cardinal has already demonstrated successful wrapping and unwrapping of assets across both the Bitcoin and Cardano mainnets. The team expects further enhancements ahead of the official 1.0 release.Cardinal also aims to support interoperability with other major blockchains like Ethereum and Solana, positioning itself as a pivotal infrastructure layer for cross-chain decentralized applications.The Cardinal launch comes amid broader efforts by Cardano to promote cross-chain collaboration, most notably through the Midnight sidechain project. Speaking at Consensus 2025 in Toronto, Charles Hoskinson announced the upcoming “Glacier Drop,” an unprecedented token airdrop that will distribute Midnight’s NIGHT and DUST tokens to approximately 37 million wallets across eight major blockchains.Midnight will be airdropped to 37 million users across 8 chains. 🔥

Charles Hoskinson: “We didn’t do an ICO or VC raise. I just build it, finish it, and airdrop it.”

The tokens will be distributed via the Glacier Drop, focusing on retail users and excluding VCs. pic.twitter.com/6j22Fl2OIMMidnight, currently in testnet, is designed as a fourth-generation “meta chain” offering private smart contracts and cooperative economics. It allows developers to build decentralized applications that span multiple chains while paying fees in native tokens like ETH, SOL, BTC, or ADA.CoinCodex’s algorithmic Bitcoin price prediction is optimistic about ADA price action in the near and medium term. Currently trading around $0.70, ADA is projected to surpass the $1 threshold by August 2025 and potentially reach $1.20 by the first quarter of 2026Get Started on eToroeToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.