Introduces Bitcoin-focused Decentralized Finance (DeFi) solution, dubbed "Cardinal," by the Cardano platform.

Introduces Bitcoin-focused Decentralized Finance (DeFi) solution, dubbed "Cardinal," by the Cardano platform.

New Era for DeFi: Cardinal's Decentralized Protocol for Bitcoiners

Get ready to dip your toes into the world of DeFi, Bitcoin style! Cardinal, the first decentralized finance (DeFi) protocol for Bitcoin enthusiasts, has been unleashed by Cardano founder, Charles Hoskinson.

Cardinal, developed by Input Output, aims to revolutionize the DeFi landscape by offering services like lending, staking, and borrowing to Bitcoin holders - all without the need for a centralized custodian or bridge system.

But how does it work? Cardinal puts Bitcoin's leftover transaction outputs (UTXOs) to use. These UTXOs represent ownership and are transformed into wrapped tokens, pegged one-to-one with Bitcoin. Users can easily transform these tokens back to good ol' Bitcoin when they please, using a secure and counterfeit-resistant system.

Trustless Transactions

One of Cardinal's standout features is its trustless architecture. Gone are the days of relying on a centralized custodian. Instead, Cardinal transactions are executed using multi-signature technology, MuSig2. This guarantees that even if one participant is a bit shady, the network's security remains intact.

No More Rehypothecation!

Let's talk about rehypothecation - the practice of using assets without permission. Cardinal graciously offers full control over assets to users, maintaining the original Bitcoin safely.

BitVMX: The Magic Behind the Scenes

Cardinal also boasts the use of BitVMX technology. This technology enables complex transactions to happen off-chain, making them practical and secure. By integrating Cardano smart contracts with Bitcoin's local command system, it simplifies asset transfers between the two networks seamlessly.

A Giant Leap for Cardano

Cardinal was introduced with a bang at the Bitcoin 2025 Conference, where the IO team flawlessly executed a BTC-Cardano transfer, bypassing the usual requirement for a bridge, all thanks to BitVMX. This achievement marks a significant milestone in Cardano's mission to provide a sturdy infrastructure for Bitcoin-based applications.

As for the Cardano DeFi ecosystem, it's seen better days. According to DefiLlama data, the total value locked reached $415 million in May but plummeted to $334 million by June 10. The Cardinal team anticipates that its protocol will attract new liquidity, bringing an end to this downward trend.

Get in on the Action

Stay tuned for more DeFi excitement with Cardinal!

Sources:1. https://iohk.io/en/blog/posts/2022/05/25/cardinal-bringing-together-bitcoin-and-decentralized-finance/2. https://medium.com/@CardinalProtocol/cardinal-architecture-12abc0f288443. https://medium.com/@InputOutput/input-output-announces-cardinal-a-protocol-to-bring-bitcoin-to-decentralized-finance-84a6f75a05d14. https://medium.com/@CardinalProtocol/secured-bonding-curves-7e7ee3e1bfc65. https://abebinay.medium.com/multiparty-ec-signatures-for-cardinal-decentralized-finance-on-cardano-7febad5780f7

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• The Cardinal protocol, a groundbreaking DeFi solution for Bitcoin enthusiasts, is defined by Charles Hoskinson as it offers decentralized services such as lending, staking, and borrowing, all without the need for a centralized custodian or bridge system. This innovation in technology, developed by Input Output, transforms Bitcoin's leftover transaction outputs into wrapped tokens for seamless use in DeFi investing.
• In the realm of DeFi, Cardinal introduces trustless transactions through the use of multi-signature technology, MuSig2, ensuring the network's security even in the event of a participant's falsification, eliminating the need for rehypothecation and offering users full control over their assets. This decentralized finance phenomenon is expected to attract new liquidity, revitalizing the Cardano DeFi ecosystem.

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