- Midnight aims to bring private DeFi to Bitcoin and XRP through cross-chain smart contracts.
- Wrapping assets could enable lending, borrowing, and yield without public transaction data.
- The move could unlock major dormant liquidity and reshape DeFi infrastructure.
Cardano founder Charles Hoskinson is once again pushing the boundaries of decentralized finance, this time with an ambitious cross-chain vision. In recent remarks, Hoskinson suggested that Bitcoin and XRP could soon gain access to DeFi tools through Cardano’s privacy-focused Midnight protocol, potentially as early as 2026. If realized, the move could unlock new utility for two of crypto’s largest assets while addressing one of DeFi’s most persistent challenges: privacy.
Midnight’s Role as a Cross-Chain Privacy Layer
Midnight, launched as a partner chain to Cardano, is designed to support private smart contracts using zero-knowledge cryptography. Unlike traditional Layer-1 competition, Midnight’s purpose is to sit between blockchains, allowing assets from different networks to interact securely without exposing sensitive transaction data.
Hoskinson has positioned Midnight as a bridge rather than a rival, enabling interoperability while embedding privacy at every interaction point. This approach could allow Bitcoin and XRP holders to engage with smart contracts without broadcasting financial details publicly—an area where both ecosystems currently fall short.
How Bitcoin and XRP DeFi Could Work
According to Hoskinson, the plan involves wrapping external assets, including XRP, on Midnight. Once wrapped, these assets could be used in DeFi applications such as lending, borrowing, and yield generation. For XRP in particular, this could represent a major shift.
While the XRP Ledger is known for speed and efficiency, it lacks native privacy-preserving smart contract functionality. Midnight could fill that gap, offering XRP holders access to more advanced financial tools without sacrificing confidentiality. Similar logic applies to Bitcoin, whose DeFi activity has grown but remains limited by design constraints and transparency concerns.
Why This Matters for DeFi Growth
If successful, Bitcoin and XRP DeFi on Midnight could unlock significant dormant liquidity. Both assets represent massive market value that has historically remained underutilized in DeFi compared to Ethereum-based tokens. Adding privacy-aware infrastructure could make DeFi more appealing to institutions and users wary of fully transparent financial activity.
Hoskinson has described Midnight as an example of a “fourth-generation” blockchain—one that shifts the focus from isolated Layer-1 ecosystems to shared, cross-chain infrastructure. In this view, the next phase of DeFi growth will depend less on speed wars and more on interoperability, privacy, and real-world usability.
While timelines remain indicative rather than fixed, Hoskinson’s comments suggest that Cardano sees Midnight as a long-term growth engine rather than a side project. Collaboration signals, including past outreach to Ripple and broader wallet support, reinforce the idea that Cardano is aiming to position itself at the center of cross-chain DeFi innovation.
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Whether Bitcoin and XRP users embrace this vision will depend on execution. But if Midnight delivers on its promise, it could reshape how legacy crypto assets participate in decentralized finance.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. CoinBrief.io is not responsible for any financial losses.