Cardano launches Cardinal protocol to integrate Bitcoin into DeFi

Cardano founder Charles Hoskinson has announced the launch of the Cardinal protocol, a new solution that enables Bitcoin integration with decentralized finance (DeFi) applications. Developed InputOutput HK (IOHK) technology allows BTC holders to participate in lending, staking, and yield farming on the Cardano blockchain without intermediaries.

The protocol utilizes the MuSig2 multi-signature system to facilitate secure communication between the Bitcoin and Cardano networks. When users transfer bitcoins, the system creates a digital representation that can be used across various decentralized applications, while the original coins remain securely locked until redemption.

This innovation unlocks new opportunities for Bitcoin holders, who can now earn passive income through platforms like MinswapDEX and SundaeSwap while maintaining full custody of their original assets.

The protocol launch positively impacted ADA's market performance, with Cardano's native token seeing its daily trading volume surge to $500 million and its price rise to $0.7093 following the announcement.