Cardano builds “the first bridge” to interact with Bitcoin
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Cardinal foreshadows functionalities such as staking, loans and trading of ordinals in Cardano with BTC.
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The protocol would serve as a bridge that surrounds Bitcoin UTXO for Defi in Cardano.
The Cardano Network presented Cardinal on June 10, a new protocol designed to connect and function as a bridge between that network and the Bitcoin ecosystem.
This development, according to Charles Hoskinson, founder of Cardano, represents the “first Bitcoin developed protocol developed for Cardano.”
Cardinal, developed by Input Output Hong Kong (IOHK), one of Cardano’s founding entities, led by Hoskinson, Introduce a mechanism with “minimal confidence dependence” To integrate the UTXO (Non -spent transactions outings) of Bitcoin into the Cardano ecosystem, according to Romain Pellerin, IOHK CTO.
However, the protocol is not yet a completely ready solution for its production. Pellerin said Cardinal is in its early stagesdescribing it as an infrastructure that requires greater refinement.
How does cardinal work?
The cardinal nucleus lies in its ability to handle the Bitcoin UTXO. A UTXO represents a bitcoin portion that has been received but still not spentserving as proof of property on the BTC network.
Traditionally, integrating bitcoin into other ecosystems required custody solutions or wrapped tokens (Wrapped Token), which introduced complexity and risks, such as the dependence on centralized intermediaries.
Cardinal in Cardano would change that paradigm by allowing a bridge with minimal confidence dependence, which reduces the need for third parties, according to Pellerin.
Iohk’s CTO pointed out that Cardinal has achieved a historical feat by achieving a successful wrapped version of a Bitcoin ordinal for use in the main network of Cardano.
This process involves blocking a UTXO in Bitcoin and coin a non -fungible token (NFT) corresponding in Cardano, which represents the blocked asset. The wrapped asset can then be used within the Cardano ecosystem, preserving its parity one by one with the original bitcoin. When users want to redeem their bitcoin, the NFT burns in Cardano and the original UTXO is unlocked in Bitcoin.
Does new opportunities defi for Bitcoin holders?
Pellerin emphasized that Bitcoin holders can Interact in Cardano with wrapped BTC versions Through platforms such as Indigo Protocol, lend them through Liqwid Finance or use them for loans in Lenfi or Fluidtokens.
They can also participate in performance cultivation, a Provide liquidity process to decentralized exchanges such as Minswap or Sundaeswap in exchange for rewards, or merchant ordinals based on bitcoin in markets such as JPG Store.
These opportunities allow Bitcoin holders to generate returns on their assets, a functionality previously limited by the lack of native support for intelligent contracts in Bitcoin.
In turn, with Cardinal, Pellerin continued, the tokens created by the Ordinals protocol in Bitcoin They serve as a guarantee in applications DEFIas well as to auction between chains or used in loan and indebtedness protocols without losing its origin, that is, the registration of its origin and property.
In such a way, although this protocol is in an experimental phase, cardinal could promote the adoption of both Cardano, enhancing its adoption by integrating Bitcoin’s liquidity in Defi, as well as adding new functionalities to Bitcoin, something that usually generates controversies between more conservative bitcoiners.
