Cardano founder Charles Hoskinson has discussed how the Cardano network could play a role in Bitcoin DeFi, unlocking $2 trillion in assets.
Hoskinson highlighted this during a conversation on the Mr. M Podcast, in which he appeared alongside early Bitcoin adopter Davinci Jeremie. The Cardano founder explained how Bitcoin holders could access decentralized finance opportunities without leaving the Bitcoin ecosystem.
Cardano Presents a Solution for Bitcoin DeFi
Hoskinson noted that Bitcoin DeFi could become a major sector. “So Bitcoin DeFi is going to be a huge category because it’s like $2 trillion of assets are waking up,” the Cardano founder remarked.
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He emphasized that Bitcoin’s vast market value currently lacks total value locked (TVL) in DeFi applications. According to him, Bitcoin holders want yield and new financial tools. Interestingly, Cardano’s infrastructure presents a solution, particularly through Babel fees.
For context, Babel fees allow users to pay transaction fees using the native asset instead of ADA. If Bitcoin is wrapped on Cardano, users can pay fees in Bitcoin rather than needing ADA, making the experience seamless.
He compared this process to using a credit card abroad, where transactions occur in one currency but are settled in another.
Midnight Can Help
Additionally, Hoskinson highlighted that Bitcoin DeFi and the Midnight project are both launching this year. He had previously suggested that Midnight would make Cardano multichain. According to him, the innovation would increase transaction volume and user engagement.
As a result, more projects may integrate with Cardano. He compared the current blockchain landscape to islands, suggesting that increased interoperability will transform these isolated ecosystems into a more connected environment, similar to Florida’s connection to the mainland.
“You know, we have a dedicated group of people that that’s all they do for these types of integration so that, you know, island stuff will go away. It’ll become more like Florida. And it’s now connected to a greater whole and more and more people will come in,” the Cardano founder said.
Hoskinson: Cardano Borrows From Bitcoin
Meanwhile, Hoskinson further stressed that Cardano borrows several principles from Bitcoin. These include deflationary monetary policies, a fixed supply, the UTXO transaction model, and elements of proof-of-stake that resemble Bitcoin’s proof-of-work mechanism.
With the Cardano network incorporating these principles, it looks to provide a familiar yet enhanced experience for Bitcoin users entering DeFi.
Meanwhile, Hoskinson also outlined the broader vision for Cardano’s role in blockchain adoption. For the network to thrive, it must attract more daily and monthly active users, increase transaction volume, and gain trust from regulatory bodies.
He believes that as Cardano expands into niche markets like Bitcoin DeFi, industry leaders such as MetaMask will seek integration opportunities. This, in turn, could drive exponential growth in TVL, user activity, and transaction volume over the next two to three years.
Hoskinson predicted: “I think probably in the next 24, 36 months, we’ll continue to see exponential improvements in the TVL, in the user count, transaction volume.”
