Cardano launches its first Bitcoin DeFi protocol ‘Cardinal’

Cardano has launched Cardinal, its first decentralized finance protocol designed specifically for Bitcoin users. 

The announcement was made by Cardano ada3.34%Cardano founder Charles Hoskinson on June 9 via X. Developed by Input Output, the research and development team behind Cardano, Cardinal allows Bitcoin btc2.3%Bitcoin holders to access DeFi services such as lending, staking, and borrowing without using traditional custodians or centralized bridges.Cardinal functions by wrapping Bitcoin, particularly its unspent transaction outputs. UTXOs are bits of Bitcoin that have been left over from transactions and are used to represent ownership. They are converted into wrapped tokens by the protocol, which maintains a 1:1 peg with Bitcoin. Users can redeem their wrapped BTC at any time through a secure, fraud-resistant process.

What makes Cardinal different from typical wrapped Bitcoin solutions is its trust-minimized structure. Instead of depending on a central custodian or federated system, Cardinal uses MuSig2, a cryptographic system that allows multiple parties to sign transactions together.

This ensures that the original Bitcoin stays locked on its native chain and that the system functions securely, even if only one participant is honest.