Cardinal Enables Custodian-Free DeFi for Bitcoin
Cardinal, a new protocol by InputOutput HK (Cardano’s developer), allows Bitcoin UTXOs to be wrapped into yield-generating DeFi assets. Users can lend, stake, or borrow Bitcoin without custodians by locking it under MuSig2 multisig.
Unlike traditional wrapped BTC models, Cardinal uses BitVMX for verifiable off-chain execution and supports cross-chain redemption via fraud-proofed peg-outs. It leverages Cardano’s eUTXO model—similar to Bitcoin’s—for seamless smart contracts but remains chain-agnostic, compatible with Ethereum, Solana, and more.
Key features include:
Wrapped UTXOs: 1:1 pegged NFTs/tokens transferable on-chain or via Ordinals.
Trust-minimized: No rehypothecation, ensuring security.
Ordinal integration: Enables cross-chain DeFi use (collateral, auctions, lending).
While still evolving, potential upgrades include ZK-proofs and liquidity pools. This innovation strengthens Bitcoin’s utility in DeFi, aligning with its "people’s money" ethos.
