The recent announcement by Cardano founder Charles Hoskinson regarding the launch of the new protocol Cardinal, representing the first DeFi platform for Bitcoin holders on the Cardano network, has sparked significant interest.
What is Cardinal?
Cardinal is a cross-chain DeFi protocol that allows BTC holders to stake, borrow, or lend their crypto assets without relinquishing control. The protocol utilizes the MuSig2 cryptographic method for secure transaction authorization by multiple parties, ensuring trust-minimized operations across networks.
Significance for Cardano's Ecosystem
Cardinal enables Bitcoin UTXOs to be utilized directly within the Cardano ecosystem and facilitates unique digital assets through Ordinals. This marks an important step for Cardano into the DeFi space, narrowing the gap with Ethereum. Recently, ADA's price rose by 5.61% with a trading volume increase of 40%.
Potential for Attracting Investors
Cardinal could attract new investors to the Cardano ecosystem, including large Bitcoin holders, due to its unique low-risk structure. With the integration of ZK technologies in the future, this protocol may enhance trust in Cardano and improve key metrics, such as total value locked.
Cardinal opens new horizons for Cardano by providing Bitcoin holders with safe access to DeFi tools. The project's success will depend on user trust levels and their readiness to adapt to new opportunities.
