Cardano founder Charles Hoskinson has announced a new era for Bitcoin enthusiasts by launching Cardinal, a Bitcoin DeFi solution. This marks the first time Bitcoin can be used in decentralized finance on the Cardano network without relying on third-party custodians.
Welcome to the first Bitcoin DeFi protocol developed for Cardano https://t.co/CoYvrYnIfI
— Charles Hoskinson (@IOHK_Charles) June 9, 2025
Developed by Input Output HK, Cardinal lets users tap directly into Bitcoin’s unspent transaction output (UTXO) for lending, staking, and borrowing.
Bridging Bitcoin and Cardano
Cardinal uses the advanced MuSig2 multi-signature protocol to facilitate non-custodial cross-chain peg-in and peg-out operations. This means users can lock their Bitcoin holdings into intelligent contracts on Cardano and later reclaim them with full verification.
Wrapped UTXO is a core feature of Cardinal. It creates assets, such as NFTs or tokens, that are natively pegged 1:1. These assets can be transferred on-chain or with Ordinals and are burnable to release Bitcoin or Ordinals. Moreover, Wrapped UTXO is minted cross-chain and can be safely redeemed at any time through a fraud-proof peg-out.
A significant aspect of Cardinal is its use of BitVMX. This system allows complex smart contract logic to run off-chain for Bitcoin while still proving results on-chain. This makes Cardinal immediately usable with unique digital assets like NFTs and Ordinals.
With Cardinal, Bitcoin holders can now use their BTC on Cardano while keeping full control. They can stake, lend, or take out loans, farm on platforms like MinswapDEX and SundaeSwap, and even trade Ordinals.
InputOutput HK CTO Outlines Why Cardano Is the Ideal Launchpad
Romain Pellerin, InputOutput HK Chief Technology Officer (CTO), highlighted some reasons that make Cardano the right choice for this project. According to him, the extended UTXO (eUTXO) model is like Bitcoin’s, which allows Cardano to handle powerful smart contracts with ease.
Additionally, the network has strong smart contract features, giving developers more control and security. Pellerin emphasized that Cardinal is not limited to Cardano. This innovation is designed to work with many blockchains, like Ethereum, Solana, Avalanche, and more in the future.
However, Pellerin sees significant room for improvement. He suggests using zero-knowledge (ZK) technology to generate solidarity proofs and adopting recursive state proofs. He also noted that adding liquidity provider systems for fungible assets and integrating wallets could greatly improve the user experience.
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