Cardano announced the integration of the Bitcoin Rollup protocol BitcoinOS, transforming into Bitcoin L2 with the goal of releasing up to $1.3 trillion in Bitcoin liquidity for its ecosystem. Unlike solutions that rely on centralized custodians, Cardano allows users to transfer Bitcoin to its ecosystem without the need for trust through the Grail bridge of BitcoinOS, enabling participation in various activities such as DeFi.
Charles Hoskinson, co-founder of Cardano, was one of the early Bitcoin enthusiasts. However, he criticized the technical limitations of Bitcoin, which hindered the development of diversified application scenarios. Therefore, he chose to develop his own Layer 1 blockchain, Cardano.
Now, as the awakening of Bitcoin’s dormant liquidity receives increasing attention, Cardano also announced the integration of the Bitcoin Rollup protocol BitcoinOS, transforming into Bitcoin L2, with the hope of releasing over $1.3 trillion in Bitcoin liquidity for its ecosystem.
Hoskinson described BitcoinOS as a breakthrough technology, especially after successfully validating the first ZK proof on the Bitcoin mainnet at the end of July. This technology provides Bitcoin with “eyes and a brain,” enabling it to identify and understand activities on other chains. He further explained that this technology allows for trustless interoperability between Bitcoin and other blockchain ecosystems.
Cardano’s integration of BitcoinOS has three highlights. In their joint statement, Cardano emphasized that their transaction models are both based on the UTXO model, enhancing compatibility between the two chains and allowing Cardano smart contracts to run directly on the Bitcoin mainnet without relying on bridges.
Additionally, Cardano adopts a layered architecture, prioritizing stability in the settlement layer and optimizing scalability and flexibility in the computation layer. Cardano stated that this design philosophy aligns with the position of Bitcoin supporters in the block size debate.
Cardano pointed out that unlike wrapped versions of Bitcoin, such as WBTC relying on centralized custodians, Bitcoin users can transfer BTC to the Cardano ecosystem without the need for trust through the BitcoinOS Grail bridge. After transferring BTC to Cardano, users can participate in over 1,300 protocols on the network, such as converting BTC to fiat or other assets on DEXs like SundaeSwap or decentralized lending through Liqwid. Cardano is optimistic about this demand and noted that there are currently over 147,000 WBTC in circulation on Ethereum, with a total market value of around $9.75 billion, while Cardano’s DeFi ecosystem TVL is only about $225 million, indicating significant room for growth.
Cardano sees the potential catalyst for ADA’s rise. They believe that investors attracted by the revival of Bitcoin through Ordinals, BRC-20, and Bitcoin ETF will not only want to purchase Bitcoin but also other assets with seemingly higher growth potential.
Cardano states that it will play a leading role in the Bitcoin revival era, and its native token ADA will benefit from the rise in its fundamental value, whether through governance participation or gas payments.
ADA has risen nearly 4%. However, according to CoinGecko data, ADA is currently trading at $0.3488, a 3.6% increase in the past 24 hours, which seems to be driven more by the rise in Bitcoin.
Currently, the top three circulating wrapped Bitcoin tokens are WBTC, BTCB, and SolvBTC. Cardano’s entry into this race with a trustless solution (tBTC being the most representative currently) could potentially change the existing market landscape, which is worth anticipating.