It has recently been proposed by Charles Hoskinson, the founder of Cardano, that this functionality of DeFi services for the Bitcoin and the XRP networks may become a reality via the “Midnight Protocol” chain, a “privacy-focused” sister chain of the Cardano chain. The “Midnight” chain, launched late in 2025, uses “zero-knowledge cryptography” along with “smart contract” capabilities that could allow other blockchain assets to be involved in DeFi services without exposure of “transactional data.”
Recently, Hoskinson has described Midnight as a bridging layer between Cardano and other large blockchain platforms, such as Bitcoin and the XRP Ledger, and providing a layer of privacy when those connections are made. This will allow for lending, borrowing, and yield farming on a DeFi platform from the holders of Bitcoin and XRP, who currently have none of those options on a public implementation of their blockchain platforms.
Midnight’s architecture is designed to natively support wrapped versions of assets from external networks. By providing the ability to access DeFi with these wrapped tokens, the protocol may unlock dormant liquidity throughout ecosystems that have either lacked native smart contract support or any notion of protection concerning privacy. This could expand the circle of DeFi activity from just purely smart contract-compatible chains such as Ethereum and Cardano to include wider-scale participation with assets like Bitcoin and XRP.
Midnight for Cross-Chain and Privacy-Focused DeFi
Supporters of the Midnight Protocol describe it as a part of a “fourth generation” of blockchain technology, from single-blockchain smart agreements to a privacy level across chains, capable of integrating different blockchains altogether. In addition to the new possibilities opened for both Bitcoin and XRP, Midnight’s approach emphasizes a high level of privacy achievements through zero-knowledge proofs and customizable visibility options in transaction exchanges, with a strong emphasis on compliance and anonymity, respectively.
Functionality of privacy has emerged as one of the major distinguishing factors, as the transparent nature of blockchains is struck in maintaining the needs of institutional and retail clients, who often call for private transactions. Since Midnight provides privacy solutions on top of the existing blockchain, it might appeal to developers who create dApps with its primary focus on transactions and other regulatory compliances.
Hoskinson’s comments also put a spotlight on more ambitious goals for the Midnight project: to catalyze faster growth in decentralized finance on Cardano and elsewhere. Support for assets not native to Cardano may bring more users, liquidity, and privacy-preserving DeFi, with spillovers into ecosystem growth.
The integration of Bitcoin and XRP in DeFi via Cardano’s Midnight Protocol represents the effort of achieving interoperate and privacy-driven DeFi. The critical aspect of Midnight Protocol is that, as it advances, the crypto world will experience new usages in terms of assets beyond their native offerings in the financial space, as it relates to the goals of DeFi. With this emerging technology, the future of DeFi will experience revolutionary changes as it continuously strives to achieve improved efficiency and security in financial transactions, thereby gaining monumental popularity in the crypto world.
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