Cardano Network announced Cardinal on June 10th. This is a new protocol designed to connect and act as a bridge between its network and the Bitcoin ecosystem.
According to Charles Hoskinson, founder of Cardano, the development represents “the first Bitcoin development protocol developed for Cardano.”
Cardinal was developed by Input Output Hong Kong (IOHK), one of the founding entities of Cardano, led by Hoskinson. Introducing mechanisms with minimal trust dependence According to IOHK CTO Romain Pellerin, to integrate Bitcoin’s UTXO (pent non-pent transaction outings) into the Cardano ecosystem.
However, this protocol is not a fully prepared solution for its production. Peralin said Cardinal is in its early stagesexplain it as an infrastructure that needs to be refined more.
How does Cardinal work?
The Cardinal Nucleus lies in its ability to process Bitcoin Utxo. UTXO represents the bitcoin part It was received but not yet spentserves as a proof of property on the BTC network.
Traditionally, Bitcoin must be integrated into other ecosystems such as custody solutions or wrap tokens (Wrap token), and reliance on centralized intermediaries, introduced complexity and risks.
Cardano’s Cardinal changes its paradigm by allowing bridges with minimal trust-dependentness, which reduces the need for third parties, according to Pellerin.
The IOHK CTO pointed out that Cardinal achieved historic feat by achieving a successful version of the Bitcoin order used in Cardino’s main network.
This process blocks UTXO with Bitcoin and coins the corresponding non-capacity token (NFT) with Cardano. This represents a blocked asset. The wrapped assets can be used within the Cardano ecosystem and can store parity one by one in the original Bitcoin. If a user wants to redeem Bitcoin, the NFT burns in Cardano and the original UTXO is locked in Bitcoin.
Is the new opportunity for Bitcoin holder defi?
Pellerin emphasized that Bitcoin holders can do Dialogue in Cardano in a wrapped BTC version You can lend them through LiqWid Finance through platforms such as the Indigo protocol, or use them for loans with Lenfi or Fluidtokens.
They can also participate in performance cultivation Provides a liquidity process Merchant ordinances based on Bitcoin on decentralized exchanges such as Minswap and Sundaeswap, in exchange for rewards, or in markets such as JPG stores.
These opportunities allow Bitcoin holders to generate returns on their assets. This is a feature previously limited by the lack of native support for Bitcoin’s intelligent contracts.
Next, along with the cardinal, Pellerin followed, tokens created by Bitcoin’s Ordinals protocol They act as a guarantee for your application defito use the inter-chain auction or loan and debt protocol without losing its origin, i.e. registering its origin and property.
With such a method, this protocol is in the experimental stage, but Cardinal can promote adoption of both Cardanos, enhance adoption by integrating the liquidity of Bitcoin defi, and add new features to Bitcoin.