The Cost of a Narrative: Cardano and Bitcoin DeFi

The Cardano development team is asking ADA holders for approval to withdraw a large sum from the network’s treasury - tens of millions of dollars - to build a project that would use BTC as capital within the Cardano ecosystem.

I wrote about the technical possibility of this kind of integration about a year and a half ago. Back then, some active members of the Cardano community were seriously discussing the idea that the network’s future could be as a DeFi layer for Bitcoin.

At the time, it sounded promising. The permissionless Grail Bridge, launched around then, seemed to open the door to exactly that.

But I overlooked one thing: Cardano’s pace. Eighteen months have passed, and only now are serious development efforts being planned.

At this point, though, I no longer see much potential in this direction. If this integration were truly in demand, it would likely have been built already - and it wouldn’t require tens of millions of dollars. The fact that it’s only being pursued at that price suggests a lack of both enthusiasm and real market need.

Which makes the bet on Cardano as a DeFi layer for Bitcoin look increasingly weak. The project’s creators have to look for other narratives.

If you’re considering your options, you can always swap ADA for BTC or any other promising cryptocurrency on rabbit.io.