Cardano’s analysis and engineering arm, Enter Output World (IOG), has unveiled “Cardinal,” the primary protocol that enables native Bitcoin unspent transaction outputs (UTXOs) — together with Ordinals — to flow into inside Cardano-based decentralized-finance markets with out custodians or federations.
The disclosure got here late Monday when IOG chief know-how officer Romain Pellerin revealed a nine-part thread on X describing Cardinal as “a brand new primitive for Bitcoin,” including that his staff has “made historical past with the primary cross-chain Ordinal wrap.” He summarized the design in a single sentence: “Bitcoin stays locked below MuSig2; the wrapped UTXO is minted cross-chain; it’s redeemable at any time through fraud-proofed peg-out — no rehypothecation, no compromise.”
How The Cardano Bridge Works
Cardinal retains the unique satoshis on the Bitcoin base layer, secured by a MuSig2 aggregated multi-signature managed by a rotating operator set. A hashed-timelock contract (HTLC) defines the circumstances below which the funds could also be reclaimed; on the Cardano aspect, an extended-UTXO (eUTXO) sensible contract mints a 1:1-pegged non-fungible token that represents the locked UTXO. Off-chain verification is equipped by BitVMX, a verifiable-execution framework that publishes fraud proofs to Bitcoin if an operator cheats. Pellerin famous that the “1-of-n sincere” assumption retains the bridge nearer to Bitcoin’s personal safety mannequin than as we speak’s federated walk-arounds similar to wBTC.
As a result of each wrapped output is itself an NFT, Ordinals retain their on-chain provenance once they cross the bridge. As soon as resident on Cardano, the wrapped satoshis or Ordinals turn out to be totally programmable property that may be deposited on automated-market-maker swimming pools, lent out for yield, or used as collateral with out relinquishing possession of the underlying inscription. “Ordinals can now be utilized in DeFi, function collateral, be auctioned throughout chains, borrow / lend worth with out dropping provenance,” Pellerin wrote.
Custodial and federated bridges similar to BitGo’s wrapped-Bitcoin contracts on Ethereum have dominated the $8.7 billion BTC-on-DeFi market however have additionally launched single-point-of-failure and rehypothecation dangers. The bridging sector has misplaced greater than $2.5 billion to exploits since 2021, in response to public incident trackers. Cardinal’s one-of-n MuSig2 mannequin goals to shrink the belief floor whereas retaining capital effectivity: redeeming the NFT triggers a burn on Cardano and an unlock on Bitcoin, with BitVMX proofs revealed if an operator withholds the discharge.
Cardano’s eUTXO accounting mirrors Bitcoin’s personal UTXO construction, simplifying the mathematical equivalence proofs required for a symmetric peg. Low charge volatility, native tokenization (no ERC-721 wrapper layer) and deterministic, script-level transaction prices additional influenced the selection, Pellerin stated. Nonetheless, the specification launched on GitHub is chain-agnostic; extensions for Ethereum, Solana and Avalanche are already sketched within the repository.
Cardano founder Charles Hoskinson amplified the announcement to his 1.5 million followers, writing: “Welcome to the primary Bitcoin DeFi protocol developed for Cardano.”
Cardinal just isn’t but a turnkey client product. Pellerin confused that the discharge is “infrastructure” and referred to as for exterior contributors to enhance SNARK-based burn-proof technology, recursive state proofs and pockets UX. Unbiased auditors may even have to scrutinize the MuSig2 implementation and operator rotation logic, each frequent failure factors in prior bridge exploits.
At press time, ADA traded at $0.6984.
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