In a recent conversation, Charles Hoskinson, the founder of Cardano, emphasized the significance of the privacy network Midnight as a crucial element for Bitcoin decentralized finance (DeFi). He stated, “Bitcoin users desire privacy and Cardano could handle much of the programming workload.”
Hoskinson illustrated a scenario where Midnight acts as a private coordination layer. This setup would enable Bitcoin holders to earn yields according to their preferences. Additionally, he introduced Pogun—a system designed to integrate Bitcoin-based DeFi into Cardano. Hoskinson described “Pogun” as an interconnected ecosystem that facilitates dynamic interactions among $BTC, $ADA, and NIGHT.
Responding to insights from Hoskinson, an X user inquired about how this initiative would benefit the $ADA ecosystem. The user questioned, “What is the advantage of holding $ADA over $BTC? Are we inadvertently undermining our core token that underpins our entire incentive structure?”
“Every single transaction required Ada to happen. The bitcoin user paid a fee in ada but didn’t see it,” said Charles Hoskinson (@IOHK_Charles) on May 3, 2026.
In his reply, Hoskinson clarified that “every single transaction required Ada to happen,” indicating that fees will be settled in $ADA. This approach is expected to enhance its utility significantly.
Pogun is set to introduce a comprehensive liquidity and credit engine for Bitcoin: featuring a non-margin credit market by Q2; followed by yield DApp deployment in Q3; and culminating with BitVM-powered trust-minimized bridges for Bitcoin by Q4.
The overarching aim is transforming dormant $BTC into productive assets within Cardano’s framework—mainnet launches are anticipated throughout 2026.
The Pogun Initiative within Cardano
Pogun seeks to establish decentralized finance based on Bitcoin within Cardano’s environment. Essentially, it will allow Bitcoin holders not only to borrow against their assets but also earn yields without relinquishing custody over them through centralized entities. The lending feature of Pogun aims for public rollout by Q2.
This initiative forms part of nine proposals put forth by Input Output Group—the builders behind Cardano—to enhance network capabilities focusing on scalability and expanding into the realm of Bitcoin DeFi.
A highlight among these proposals includes Leios—a significant consensus upgrade which Input Output asserts will boost transaction processing capacity between tenfold and sixty-five times more than current levels—targeting over 1,000 transactions per second. A test release for Leios is scheduled for June with full implementation expected before year-end 2026.
FAQ:
- What role does Midnight play in relation to Bitcoin?
Midnight serves as a private coordination layer allowing users greater control over yield generation while using their Bitcoins securely within DeFi frameworks offered through Cardano. - How does Pogun facilitate borrowing against Bitcoins?
Pogun enables users holding Bitcoins on its platform access loans or earn interest without transferring ownership or custody away from themselves. - Aren’t there concerns about ADA’s utility with these developments?
Charles Hoskinson highlighted that all transactions involving these systems require ADA fees thereby enhancing its overall use case significantly. - If I hold BTC instead of ADA what advantages do I have?
Holding BTC allows you access directly into various financial services via platforms like Pogun while still benefiting from potential appreciation inherent with cryptocurrencies.