Key Quotes
- “Cardano has been made with a specific type of use cases in mind. It is the base layer for finance—slow, but super secure compared to most modern blockchains.”
- “Bifrost will become public infrastructure. It won’t have a token, it won’t be controlled by Fluid Tokens, and it won’t be a for-profit project. The idea is for Bifrost to become part of the native infrastructure of Cardano itself.”
- “We should stop advertising Cardano itself. We should see Cardano as part of the technological stack of any product. We need to move the focus of marketing to why the product is cool, not just that it’s built on Cardano.”
[The Voltaire Era and the State of Cardano Infrastructure]
[Host]: We are diving deep into the Bifrost proposal, which is upcoming soon. With the Voltaire era in full swing, the community is no longer just voting; we are auditing. We need to know if we are funding a movement, a product, or a private venture. We’ll be discussing the reality of BTC DeFi, the technical hurdles of building on Cardano, and most importantly: why should the treasury fund your vision? Matthew, welcome to the hot seat. Let’s get straight to it.
[Matthew]: Hey everyone, it’s good to be here. I’m happy to share information regarding Bifrost, Bitcoin, and the current environment, which is very interesting.
[Host]: I’m going to ask some tough questions immediately. Every developer building on Cardano faces this: In your view, is Cardano a complicated blockchain, or are we still missing the core components to compete in the broader industry?
[Matthew]: That is a very good question that I ask myself almost every day. We want Cardano to succeed and thrive. I think Cardano has many of the necessary components—some even more than other ecosystems like Ethereum—but we are still lacking a few critical pieces of infrastructure. As a community of different companies and projects, we are working on it.
Examples include a bridge that allows us to access Bitcoin liquidity, a general bridge like LayerZero to connect Cardano to the rest of the blockchain world, and Layer 2 tools for use cases requiring speed or very low transaction fees. Cardano was designed with specific use cases in mind; it is the base layer for finance. It is slow but super secure compared to most modern blockchains. However, we also need to satisfy institutions and users who want to trade fast or perform micropayments. Technology that allows us to scale, such as Hydra and its various flavors, is strongly needed.
[BTC DeFi: Marketing Narrative vs. Technical Reality]
[Host]: We’ve heard since early 2024 that Bitcoin is coming to Cardano. BTC DeFi has been a narrative for almost two years now. Is BTC DeFi a reality, or is it just a marketing narrative used to push chains?
[Matthew]: That is another very legit question. At Fluid Tokens, we were the first project on Cardano to move into Bitcoin and create actual DeFi protocols on the Bitcoin Layer 1. At that time, we were the largest staking protocol for Ordinals, Runes, and other tokens.
Luckily, the rest of the Cardano community understood that because Cardano is architecturally similar to Bitcoin, it is one of the best options to enable DeFi on top of Bitcoin itself. When you start talking about these big visions, you might not have a concrete plan yet. I agree two years is a long time, and it should have been prioritized more, but it is better than nothing. We are building it now.
This isn’t vaporware; there is a lot of work behind it. Building on Bitcoin is not easy because it is the oldest blockchain and lacks the tools you expect from Ethereum, Cardano, or Solana. If you look at other ecosystems like Sui or Ethereum, they have “Bitcoin DeFi,” but it is often a wrapped, centralized version of Bitcoin. As a holder, you are lowering your security assumptions when you bridge to those chains. Centralized versions are easier to build, which is why they were faster to market, but institutions and “OG” whales do not want to compromise on security or decentralization. They prefer to just hold BTC in their wallets.
What we are building on Cardano is different. That is why it took longer. We are finding options that allow you to bring Bitcoin over without sacrificing security. There is no risk of collateral depegging or keys being stolen. Bifrost is one such option, and Cardinal from IOG is another. These are currently the strongest alternatives for a proper, decentralized Bitcoin bridge on Cardano.
[Cardano’s Edge in the BTC DeFi Race]
[Host]: What edge does Cardano have regarding BTC DeFi that would make users choose us over other chains?
[Matthew]: From a DApp perspective, Cardano isn’t incredibly different. You have lending protocols like Aave on Ethereum, and similar ones on Solana or Sui. However, we have a massive edge at the infrastructure level.
The first is the level of decentralization. A Bitcoin holder believes Bitcoin is the most secure blockchain because it is decentralized. To move that Bitcoin, they need a destination that is just as safe. Very few blockchains have Cardano’s level of decentralization.
The second is the UTXO model. Our architecture is very similar to Bitcoin’s, whereas Ethereum, Solana, and Sui use account or object-oriented models. This similarity allows for a more seamless translation of what is happening on Bitcoin when moving money back and forth. Reaching this level of decentralization is difficult. Modern chains might have cool features, but they often have expensive validators or highly centralized token distributions. Bitcoin holders want to know that no single actor can censor them or stop them from moving their BTC back to the main chain.
[Fluid Tokens’ Role and the Bifrost Vision]
[Host]: Fluid Tokens already has a presence on Bitcoin. How will that help bring liquidity to Cardano?
[Matthew]: We built DeFi protocols like our staking platform on the Bitcoin Layer 1, but you are very limited in what you can do there. It is slow, expensive, and the logic you can enforce is minimal. We wanted to give Bitcoin holders better DeFi services, so we looked for a bridge that allowed safe movement.
I started studying BitVM when the first papers came out, and the iterations of our work became Bifrost. Bifrost is not just for Fluid Tokens; it is for Cardano in general. We want to bring BTC here so people can find yield opportunities and swap with Cardano tokens on DEXs. Our reputation in the Bitcoin space is strong; they know we deliver. When we tell them we built a bridge that is safe, open-source, and audited, they will try it because we aren’t strangers.
[Host]: Who is your target audience for Bifrost? Is it retail users or institutions?
[Matthew]: It’s a mix. To get significant liquidity, you must target institutions and whales. Bifrost is a two-layer bridge. The underlying layer is super secure, controlled by SPOs, but it is slower and theoretically more expensive. The upper layer allows for fast, cheap cross-chain swaps.
Our goal is for big liquidity providers and institutions to use the secure lower layer to provide BTC liquidity on Cardano. Retail users can then use the upper layer to swap back and forth quickly. The priority is getting enough BTC on Cardano to provide liquidity for DEXs and lending protocols like Fluid Tokens.
[The Bifrost Treasury Audit: Loan, Grant, or Investment?]
[Host]: Let’s get some “alpha” on the proposal. Is this going to be a loan, a grant, or an investment from the treasury?
[Matthew]: Bifrost will become public infrastructure. It won’t have a token, and it won’t be controlled by Fluid Tokens or any single company. The idea is for Bifrost to become part of the native infrastructure of Cardano. It works because it is controlled by the SPOs—the same actors users already trust to secure the network.
We are not earning a profit from this; it is not a private venture. It is an expense the treasury pays to integrate the bridge into Cardano. It isn’t a loan because there is no private entity to repay it. Instead, the bridge has a system where it eventually breaks even on operational costs and then returns funds to the treasury. These returns aren’t just in ADA; half will be in Bitcoin (BTC). This is a great way to diversify the Cardano treasury portfolio and protect it against ADA bear markets. Users pay fees in BTC on the Bitcoin side and ADA on the Cardano side, which automatically exposes the treasury to BTC.
[Host]: How long before the community sees a return on this investment?
[Matthew]: We hope to have Bifrost ready and usable by the end of this year. There will be an initial period where people are cautious. We expect a one-year ramp-up where we target an important actor to begin using it to demonstrate safety.
In a worst-case scenario where usage is low, the yearly maintenance cost for the treasury is very contained. However, even before the bridge breaks even, it provides indirect benefits. It increases the number of transactions on Cardano and boosts TVL. These are metrics SPOs need to remain profitable. If we spend $50,000 in ADA yearly to maintain the bridge, but the ecosystem earns much more through increased activity, it’s worth being “in the red” for a year or two.
[Bifrost vs. Pogun: Competition or Collaboration?]
[Host]: Some people are looking at the treasury money very closely. Why is Fluid Tokens taking an investment from the treasury instead of creating a private loan on your own platform?
[Matthew]: Again, Bifrost is not part of Fluid Tokens’ private stack. It is part of the Cardano stack. Once you bridge BTC, you can use it on Minswap, SundaeSwap, Liquid, or Strike. We are not taking a percentage of the bridge fees; those go directly to the treasury. This is public infrastructure that Cardano needs to avoid becoming an “island” and losing out on Bitcoin’s massive liquidity.
[Host]: How does this compete with IOG’s Pogun?
[Matthew]: Pogun is a well-thought-out product. It uses a version of the Cardinal/BitVM bridge. Pogun is an end-to-end product oriented toward a specific credit market.
We, on the other hand, don’t want to limit bridged BTC to one protocol. We want BTC to move freely across all Cardano DApps. While we will eventually attach Fluid Tokens to it, Liquid or even Pogun could attach themselves to Bifrost. We built this because Cardano is not currently sustainable—there isn’t enough transaction volume or revenue for DApps to survive long-term. We need a “coalition of DeFi” to work together. Bringing Bitcoin liquidity to Cardano increases transactions, TVL, and rewards for SPOs.
[SPO Incentives and the Roadmap]
[Host]: How will SPOs earn from this?
[Matthew]: In a perfect world, SPOs would adopt it because increased volume benefits them. Practically, though, it requires extra work. Our proposal includes two years of incentives for SPOs to adopt Bifrost. We want to incentivize them to join the network that protects the Bitcoin on the bridge. After this two-year launch phase, they will be indirectly incentivized by the volume of the software they are running.
[Host]: What is the go-to-market strategy?
[Matthew]: We have a strong reputation in the Bitcoin ecosystem. We will start by opening the bridge to key market makers. Once liquidity is established, others will follow to find yield. We also need to coordinate with Cardano DApps to ensure yield opportunities exist. Bitcoin holders currently earn 0% on their BTC. If we can offer even 2% with high security, it is a huge draw.
[Host]: Can you give us a specific timeline for the public launch?
[Matthew]: I don’t have an exact day, but the longest phase will be the audits and formal verification. We want it to be super safe. We are taking an iterative approach, releasing a new demo every few weeks so people can see the progress. We are currently aiming for Q4 2026 for full deployment. If an auditor is delayed, the timeline moves, but you can currently track progress at bifrost.fluidtokens.com.
[Final Thoughts: Building on Cardano]
[Host]: Some projects like JPEG Store and Levy have struggled or closed recently. How difficult is it to generate revenue on Cardano?
[Matthew]: Building isn’t as difficult as it used to be. When I started, we built in Plutus directly, which was prohibitive. Now, with better repositories and tools, it’s easier. The difficulty is capturing market share.
Cardano’s TVL is small, though I dislike TVL as a metric. We need to focus on the number of transactions and fees paid to SPOs. We don’t have enough daily transactions. To fix this, we should stop advertising “Cardano” and start treating it as a technological stack. Most people outside our bubble don’t care about the underlying philosophy; they care if the product is cool. All DeFi protocols need to coordinate this shift in marketing to attract new users from outside the ecosystem.
[Host]: Matthew, any last words?
[Matthew]: Please try the demo and give us feedback. When the proposal comes out officially, read it carefully. We are trying to be as transparent as possible. We are ADA stakeholders too, and we only want the treasury to spend money when strictly necessary. If you like what we’re doing, support us. If you don’t, tell us why so we can improve.
[Host]: Fluid is built by the community, for the community. Support them, break the demo, and give feedback. This proposal is about a treasury withdrawal for public infrastructure. I asked the tough questions today to protect the integrity of Cardano for the delegators and developers. Your voice is your power. See you at the next episode of “The Community Wants to Know.”
[Matthew]: Cheers, everybody.