Cardinal Protocol allows Cardano trustless Bitcoin DeFi.
MuSig2 and BitVMX ensure secure cross-chain transactions.
Bitcoin holders can lend, borrow, and stake seamlessly.

On June 9, 2025, Cardano announced Cardinal Protocol, its groundbreaking decentralized financial platform solely for users of Bitcoin. On X, Charles Hoskinson announced the launch of the project and gave details about it, as it helps in bridging Bitcoin to Cardano’s ecosystem. Input Output developed Cardinal as a platform where Bitcoin holders can participate in DeFi activities such as lending, borrowing, and staking without centralized intermediaries. In terms of cross-chain interoperability, this is a major milestone.

Organizers launched the protocol at the Bitcoin 2025 conference in Las Vegas. They also demonstrated a bridgeless BTC to Cardano transfer using a novel cryptographic framework, BitVMX. Unlike wrapped Bitcoin models of the traditional kind, Cardinal allows users to remain in control of their assets while also using the DeFi tools Cardano provides. It resolves long-standing security issues of cross-chain transactions in a trustless design.

However, Cardano’s DeFi ecosystem has had its own issues, as its total value locked has plunged from $415 million in May to $334 million as of June 10, DefiLlama indicates. Cardinal wants to turn this trend around, using Cardano’s infrastructure to scale, attract Bitcoin liquidity to bring the efficient financial services it intends to provide to the masses.

Trustless Mechanics and Future Growth

Cardinal uses MuSig2, a cryptographic system, to enable safe multi-party transaction signatures. Because Bitcoin UTXOs and Ordinals are now able to serve as collateral in Cardano’s DeFi platforms like Minswap, decentralized trading is made possible. The protocol takes a trust-minimized approach, eliminating the need for centralized bridges and securing user autonomy.

Cardano’s CTO, Romain Pellerin, has unveiled plans to introduce zero-knowledge proof technology in 2026. This will improve liquidity and use of Bitcoin DeFi and increase the privacy of transactions. The protocol has a lot of use cases, including yield farming and collateralized lending. These features will attract Bitcoin holders looking to find new opportunities.

As seen on CoinMarketCap, Cardano’s performance on the market is on the rise as its trading volume has increased by 33.15% and a volume to market cap ratio of 2.98%. ADA’s inclusion in the Nasdaq crypto index, priced at $0.6895 on June 10, indicates that ADA is becoming more prominent. Further, Cardinal’s launch secures Cardano a stake of Bitcoin’s $2 trillion market, a feat that could change the DeFi dynamics of the marketplace.

Furthermore, the open-source protocol encourages developers to create additional tools without facing any prohibitions, as should be expected. Its seamless integration, which allows Bitcoin holders access to Cardano’s ecosystem without sacrificing security, has been praised by early adopters. As a Cardinal scale, it could facilitate substantial liquidity, furthering the status of Cardano in the DeFi space.

The post Cardinal Protocol Fuels Bitcoin DeFi on Cardano appeared first on Live Bitcoin News.

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Filed under: Bitcoin - @ June 10, 2025 5:07 pm