Cardano’s New Protocol Cardinal Brings Non-Custodial BTC to Its DeFi Space
Cardano introduced Cardinal, a protocol that allows Bitcoin to be used in DeFi without centralized custody services or tokenized versions.Cardinal uses MuSig2 to securely manage cross-chain transactions and adds support for Ordinals within the Cardano ecosystem.Following the announcement, ADA rose 5.54% and Bitcoin 3.78%, while Nasdaq seeks to add ADA to its crypto index, pending SEC approval.Cardano launched Cardinal, a protocol designed to integrate Bitcoin into its DeFi ecosystem without relying on centralized intermediaries.Improving DeFi Capital EfficiencyThe initiative, announced by Charles Hoskinson, enables BTC holders to use their capital for decentralized financial operations like staking, lending, and collateralizing, without giving up control of their funds. This mechanism removes the need to convert Bitcoin into tokenized forms, a common requirement on other platforms.
Cardinal uses MuSig2, a cryptographic scheme that allows multiple parties to securely authorize transactions. Thanks to this technology, it manages cross-chain flows without the typical risks associated with bridges. It also supports Ordinals, a tool that lets users embed unique digital assets within Bitcoin and leverage them in financial products on Cardano.The system incorporates an off-chain solution called BitVMX, which optimizes transfer speeds and enhances privacy. The development team is also exploring the implementation of zero-knowledge proofs in future updates, aiming to reduce vulnerabilities and protect users’ private information.
