Cardano Founder Teases Bitcoin and XRP DeFi on Midnight Protocol

Cardano founder Charles Hoskinson has announced plans to integrate XRP into decentralized finance (DeFi) through Cardano's Midnight protocol. In a recent interview, Hoskinson confirmed that the initiative is in development and aims to leverage Midnight's privacy features to expand XRP's utility.

The Midnight protocol, designed as a sidechain, supports private smart contracts and data protection. This will allow XRP to be wrapped and used across DeFi platforms, including lending, borrowing, and yield farming, which have been limited for XRP due to its lack of native smart contract functionality according to reports.

The initiative targets unlocking over $100 billion in idle XRP liquidity. By enabling DeFi applications, XRP holders can now access yield-generating opportunities typically available on other blockchains.

What Makes Midnight's Approach Unique?

Midnight introduces privacy as a core feature, enabling selective disclosure of transaction data. This allows users to comply with regulations while maintaining on-chain confidentiality.

The strategy is particularly appealing to enterprise players who are hesitant to use fully transparent DeFi platforms. Midnight positions itself as a neutral settlement and computation layer, complementing the XRP Ledger without competing with it.

Hoskinson emphasized that Midnight's design supports cross-chain interoperability, making it a versatile solution for multiple blockchains.

Why Is XRP DeFi Significant for the Market?

XRP's large liquidity pool has remained largely inactive due to the lack of DeFi functionality. By bridging XRP into a smart contract-capable and privacy-preserving environment, Midnight could transform how institutions manage capital.

In December, Hoskinson reached out to XRP developers, inviting them to collaborate at a DeFi summit hosted at the University of Edinburgh. This move signals a broader trend toward cross-chain cooperation and interoperability.

The integration of XRP with Midnight could mark a significant turning point for both ecosystems. For XRP holders, it opens the door to DeFi applications, while for Cardano, it reinforces its role as a key infrastructure provider.

What Are Analysts and Investors Watching Next?

The success of the XRP–Midnight integration will depend on adoption rates and regulatory support. Analysts are closely monitoring how institutions respond to the new privacy-preserving DeFi tools.

Investors are also watching for potential competition from other blockchains offering similar services. For example, wrapped XRP recently launched on Solana, expanding XRP's reach into DeFi ecosystems.

Privacy-preserving stablecoins like ShieldUSD, built on Midnight, are also under scrutiny as they target real-world financial applications such as payroll and institutional settlements.

Hoskinson's aggressive 2026 strategy includes expanding DeFi capabilities across multiple ecosystems, targeting Bitcoin and XRP along with new bridges, oracles, and stablecoins.

As the project moves forward, key metrics such as TVL will provide clearer insight into its market impact.