Cardinal Protocol: Cardano’s Bold Move to Bridge Bitcoin with DeFi
Cardano has unveiled Cardinal, a groundbreaking protocol designed to bridge Bitcoin’s vast liquidity with the Cardano decentralized finance (DeFi) ecosystem. Announced on June 9, 2025, by Cardano CTO Roman Pellerin and founder Charles Hoskinson, Cardinal enables users to wrap their Bitcoin (BTC) into 1:1 pegged tokens on Cardano in a non-custodial, trust-minimized way. Unlike traditional wrapping protocols that rely on centralized custodians, Cardinal leverages MuSig2, a multi-signature technology that allows secure management of Bitcoin without requiring complete trust in all participants—only one honest actor is needed to maintain integrity.
This protocol marks a major step toward interoperability by letting BTC holders participate in Cardano’s growing DeFi sector, including lending, staking, and yield farming, without selling or moving away from Bitcoin. It also integrates BitVMX, an off-chain computing layer that supports complex Bitcoin functionalities, including the handling of Ordinals—Bitcoin-native NFTs. These Ordinals can now be wrapped and used in various DeFi applications such as collateral or NFT farming strategies, further expanding their use cases beyond mere collectibles.
Currently in a demo-ready phase, Cardinal has successfully executed wrapping and unwrapping on both Bitcoin and Cardano mainnets. While not yet production-ready, it paves the way for a secure and scalable version 1.0 release. Once mature, Cardinal could significantly increase Cardano’s total value locked (TVL) and user engagement, offering Bitcoin holders DeFi access without the risks of centralization. Additionally, it lays the groundwork for future cross-chain integration with ecosystems like Ethereum, Solana, and Avalanche. However, users are advised to proceed cautiously until full audits and broader integrations are in place. Overall, Cardinal represents a critical evolution in DeFi, fusing Bitcoin’s liquidity with Cardano’s advanced infrastructure in a decentralized and secure manner.