Charles Hoskinson, founder of Cardano, has officially introduced Cardinal Protocol, a pioneering Bitcoin DeFi framework that enables decentralized finance on Cardano without depending on third-party custodians. This innovation is the first time that native Bitcoin functionality has been implemented in Cardano’s DeFi ecosystem.

Cardinal, created by Input Output HK, enables users can use any Bitcoin UTXO to generate DeFi income, facilitating Cardano-based lending, borrowing, staking, and farming operations. At the heart of this system is Wrapped UTXO, a mechanism that can be burned to redeem Bitcoin or Ordinals, ensuring full asset control.

Instead of relying on centralized custodians, Cardinal employs MuSig2, a multi-signature scheme that ensures transparent and verifiable peg-in and peg-out transactions. It’s also interoperable with major chains such as Ethereum, Solana, and Avalanche, expanding its utility across the DeFi landscape.

To handle off-chain validation, Cardinal leverages BitVMX, which works seamlessly with Cardano smart contracts. Users can interact with protocols like MinswapDEX, SundaeSwap, and Fluid Tokens to farm, trade, or lend Bitcoin-based assets. Moreover, Ordinals can now be used as collateral for loans, traded, or auctioned across multiple chains—while preserving their historical data.

According to CTO Romain Pellerin, while this launch is a significant advancement, integrating features like zero-knowledge proofs, improved wallet compatibility, and greater liquidity would further enhance the protocol’s potential.

With Cardinal, Bitcoin holders can now tap into the expanding DeFi space on Cardano—further reinforcing Robert Kiyosaki’s view of Bitcoin as “people’s money” and marking a new era of cross-chain financial innovation.