Cardano’s research and engineering department, Input and Output Global (IOG), announced the “Cardinal”, the first protocol (including ordinal) that allows local Bitcoin unutilized transaction outputs (including ordinal) that can be spread in Cardano-based decentralized financial markets without custodians or alliances.
Late Monday, IOG Chief Technology Officer Romain Pellerin published a nine-part thread on X, describing the Cardinal as “the new primitive nature of Bitcoin”, adding that his team “made history with the history of the first cross-chain sequence.” He summarized the design in one sentence: “Bitcoin is locked under musig2; the wrapped utxo is a cross-chain of minting; it can be redeemed at any time through fraud-no reimbursement, no compromise.”
How Cardano Bridge works
The Cardinal saves the original satoshis on the bottom of the Bitcoin, which is fixed by the multi-signature of Musig2 aggregated controlled by the rotary operator combination. Hash-timelock contract (HTLC) defines the conditions for funds to be recovered; in the Cardano aspect, the extended UTXO (EUTXO) smart contract Mints a 1:1-pegged non-fixed token represents locked UTXO. Off-Chain Verification is provided by BITVMX, a verifiable execution framework that publishes fraud proofs to Bitcoin if an operator cheats. Pellerin notes that the assumption of “N Honesty 1” brings the bridge closer to Bitcoin’s own security model than federal pedestrian routes (WBTC) like today’s joint WBTC.
Since the output of each package is itself an NFT, Ordinals retains its chain source when crossing a bridge. Once reside in Cardano, the satoshis or ordinal numbers of the package will become fully programmable assets that can be stored in the automated market manufacturer pool, lend out output or used as collateral without giving up ownership of the basic inscription. “Organized numbers can now be used in Defi, used as collateral, auctioned across chain stores, borrowed/borrowed value without losing source,” Pellerin wrote.
Bitgo’s custodial bridges and federal bridges such as Bitgo’s Bitty contracts wrapped on Ethereum have already occupied the $8.7 billion BTC-on-DEFI market, but have also introduced single-point failure and re-dominated risks. According to public incident trackers, the bridge sector has lost more than $2.5 billion in utilization since 2021. Cardinal’s separate N Musig2 model is designed to narrow the trust surface while maintaining capital efficiency: redemption of NFT triggers Cardano’s burns and unlocks Bitcoin, and if the operator keeps that version, a BITVMX proof is released.
Cardano’s EUTXO accounting reflects Bitcoin’s own UTXO structure, simplifying the mathematical equivalent proofs required for symmetrical nails. Low-cost volatility, local tokenization (no ERC-721 packaging layer) and deterministic script-level transaction costs further impact the choice, Pellerin said. However, the specifications posted on Github are chain-agile. The extensions of Ethereum, Solana and Avalanche have been outlined in the repository.
Cardano founder Charles Hoskinson announced the news to his 1.5 million followers: “Welcome to the first Bitcoin Defi protocol developed by Cardano.”
Cardinals are not yet a turnkey consumer product. Pellerin stressed that the release is “infrastructure” and requires external contributors to improve SNARK-based combustion generation, recursive state proof and wallet UX. Independent auditors also need to carefully examine Musig2 implementation and operator rotation logic, both common failure points in previous bridge utilization.
At press time, the ADA traded at $0.6984.
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