Cardano has officially launched Cardinal to further its goal of connecting the Bitcoin network to decentralised finance (DeFi).
The innovative protocol enables a smooth interaction between Bitcoin and Cardano's fast-growing DeFi ecosystem, receiving praise from Cardano founder Charles Hoskinson.
On 9 June, Hoskinson drew attention to a post by Roman Pellerin, CTO of IOG, who leads Cardano's development team. Cardinal represents the most targeted initiative to attract Bitcoin liquidity into the Cardano ecosystem.
The strategic objective is to explore new opportunities in decentralised finance and offer Bitcoin holders more secure ways to use emerging blockchain applications.
Pellerin pointed out that although the first ordinal was successfully wrapped and un-wrapped on the mainnet of Bitcoin and Cardano, the protocol is not yet ready for production use.
"We had the first wrapped/un-wrapped ordinal on Bitcoin and Cardano. The protocol works, but as stated in the document, we do not consider it ready for production use yet. Improvements are on the way. Stay tuned for version 1.0," said Pellerin on X.
Cardinal in brief
Cardinal allows Bitcoin holders to access DeFi services such as loans and secured lending, in a completely decentralised manner, without having to depend on centralised bridges or custodians.
The system enhances security through an innovative method that converts the unspent transaction outputs (UTXOs) of Bitcoin into freely circulating assets on the Cardano network.
The wrapped tokens represent the equivalent of Bitcoin by maintaining a strict 1:1 value. Users can always burn the wrapped token to transfer the original Bitcoin to its source blockchain.
The protocol is based on a trust-minimized model, where at least one of the operators is assumed to act honestly, as opposed to federated models that require a majority of honest actors.
Cardinal enhances security by implementing MuSig2, which enables collaboration between multiple entities to sign individual transactions. It also reduces the risks associated with blockchain reorganisations and delays in the finalisation of cross-chain transactions by imposing a waiting period for confirmations before critical transactions are executed.
Finally, BitVMX provides support for off-chain calculations related to Bitcoin, without compromising decentralisation, enabling seamless integration with Cardano's smart contracts and native Bitcoin scripts for secure and programmable interactions.
