So, Cardano has decided to dip its toes into the Bitcoin pool with a new decentralized finance protocol called Cardinal. Because, you know, why not? Who wouldn’t want to mix the world of Bitcoin with the delightful chaos of DeFi? 🤑
The big reveal came from none other than Charles Hoskinson, the founder of Cardano, on June 9 via X. It’s like he announced a new flavor of ice cream, but instead, it’s a protocol that lets Bitcoin (BTC) holders lend, stake, and borrow without the pesky interference of traditional custodians or centralized bridges. Because who needs those, right? 🙄
Welcome to the first Bitcoin DeFi protocol developed for Cardano
— Charles Hoskinson (@IOHK_Charles) June 9, 2025
Now, Cardinal works by wrapping Bitcoin, specifically those unspent transaction outputs (UTXOs) that are just lying around like forgotten socks. These UTXOs are transformed into wrapped tokens, maintaining a 1:1 peg with Bitcoin. It’s like a magic trick, but instead of pulling a rabbit out of a hat, you get to redeem your wrapped BTC whenever you fancy, all through a secure, fraud-resistant process. 🎩✨
What sets Cardinal apart from your run-of-the-mill wrapped Bitcoin solutions is its trust-minimized structure. Instead of relying on a central custodian (who probably has a yacht named “Trust Issues”), Cardinal employs MuSig2, a cryptographic system that allows multiple parties to sign transactions together. It’s like a group project, but with fewer arguments over who didn’t do their part. 😅
This nifty setup ensures that the original Bitcoin remains locked on its native chain, functioning securely even if only one participant is honest. Talk about low expectations!
Another shiny feature is Cardinal’s take on rehypothecation. In the wild world of traditional finance, rehypothecation lets custodians reuse user assets, often without a hint of transparency. Cardinal, however, is like that friend who insists on keeping their promises—users maintain complete control over their assets while the original Bitcoin stays safe and sound. 🎉
Plus, the protocol utilizes BitVMX, an off-chain execution system that keeps things decentralized while allowing for complex Bitcoin operations. It’s like having your cake and eating it too, but without the calories. 🍰
The project was paraded around during a live demo at the Bitcoin 2025 conference, where IO performed a bridgeless BTC-to-Cardano transfer using BitVMX. It was a major step in Cardano’s quest to become the go-to platform for Bitcoin-native applications. Because who doesn’t want to be the life of the crypto party? 🎊
However, despite all this fanfare, Cardano’s DeFi total value locked has taken a nosedive, plummeting from a peak of $415 million in May to a mere $334 million by June 10, according to DefiLlama data. The team is crossing their fingers that Cardinal will lure in new liquidity, giving Bitcoin holders more ways to play with their assets without having to leave the cozy confines of the Bitcoin ecosystem. Good luck with that! 🤞
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2025-06-10 11:25