In the fifth installment of the Cardano R&D sessions – a monthly series showcasing the forefront of research and development – Input | Output Research (IOR), in collaboration with the Intersect Research Working Group, hosted an in-depth discussion on the future of interoperability within Cardano. Featuring panelists from leading projects across the ecosystem, the session explored the research that underpins Cardano’s interchain capabilities, the engineering priorities emerging from it, and how Cardano can play a pivotal role in the broader transition toward a multi-chain internet of blockchains.
The Interchains vision
Opening the session, Fergie Miller, director of research partnerships at IOG, outlined the Cardano Vision research program – a five-year strategic agenda that coordinates 34 long-term research streams across nine thematic areas, including Interchains. He emphasized that the value of blockchain technology increasingly lies not in isolated networks, but in an interconnected fabric of sovereign systems that can share liquidity, identity, and computation. Past interoperability attempts, however, have demonstrated how fragile cross-chain protocols can be when not grounded in rigorous security assumptions. More than $2bn has been lost to bridge exploits, underscoring the need for a fundamentally different approach.
Cardano’s Interchains research aims to address these challenges by enabling secure, trust-minimized connections with other blockchains, partner networks, and off-chain systems – without compromising Cardano’s core properties of decentralization, sustainability, and security. The work is divided into several research streams. These include trustless state proofs and bridges, privacy-preserving cross-chain DApps and oracles, incentivized light client infrastructure, sustainable token launch frameworks, and next-generation consensus innovations suited for interoperable ecosystems. Together, these streams establish the foundational science required for Cardano to become an interoperability hub rather than a siloed chain.
Cardinal: unlocking Bitcoin for Cardano
A highlight of the session was applied cryptography lead Jesús Díaz Vico’s presentation of Cardinal, a trust-minimized bridge connecting Bitcoin and Cardano. Cardinal represents a significant step toward enabling Bitcoin’s vast liquidity to be used securely within Cardano’s DeFi environment. Unlike previous bridging designs, which often rely on centralized custodians or require a majority to remain honest, Cardinal’s security guarantees remain intact even if all but one operator behaves maliciously. It also preserves Bitcoin ownership when bridging back – a property Díaz Vico noted is surprisingly rare in existing bridges, and one that avoids issues such as tainted coins and uncertain custody.
The protocol operates by locking Bitcoin, minting a wrapped representation on Cardano, and allowing users to burn tokens to reclaim their original coins. This model enables Bitcoin – historically a passive, non-programmable asset – to be used within Cardano’s extended UTXO (EUTXO) architecture, where smart contracts can orchestrate lending, staking, and complex multi-party interactions. Cardinal demonstrates how rigorous research, formal proofs, and pragmatic system design can bridge assets across chains without exposing users to excessive risk.
Interoperability economics and system incentives
Paolo Penna, research fellow at IOG, expanded the session’s scope by examining the economics of interoperability. His research into Airdrop Games provides a mathematical framework for incentivizing participation in new systems through token distributions. Airdrops, Penna explained, are not merely marketing tools – they are mechanisms that align incentives and bootstrap ecosystems. His work evaluates how parameters such as token distribution thresholds and contributor costs determine whether systems converge on adoption or collapse into inactivity.
These insights guide the tokenomics behind Cardano’s interoperability initiatives, where new ecosystems can share Cardano’s security and liquidity without competing for resources. From a research perspective, incentives are as important as cryptographic guarantees: a secure protocol that fails to incentivize participation will not survive, and an incentivized system that lacks security will not scale. Understanding this equilibrium is foundational to designing a network where multiple chains cooperate rather than fragment.
Toward native interchain infrastructure
The panel discussion, moderated by Fergie Miller, explored the broader ecosystem implications of interoperability. Karmel Elshinnawi, head of product, outlined the partner chains initiative, which provides a framework for launching purpose-built chains that interact natively with Cardano and each other. Rather than requiring bespoke bridges, partner chains inherit security, benefit from shared liquidity, and compose services such as privacy, identity, or specialized computation without duplicating infrastructure. A gaming chain, for example, could tap Midnight for privacy, settle outcomes, and return to its own environment – without exposing users to complex and potentially risky bridging flows.
Midnight’s head of product, Mauricio Magaldi, described how the industry's culture has shifted from ‘my chain versus yours’ to a more collaborative, multi-chain mindset. Early blockchain ecosystems were highly tribal, with communities competing over narratives and token performance. Today, the focus is increasingly on how different technologies can complement one another. Midnight’s role in that landscape is to make privacy a shared primitive rather than a chain-specific feature. Through cross-chain messaging, intent-based protocols, and emerging concepts like chain abstraction, Midnight aims to offer privacy services to applications regardless of their origin, so users can benefit from confidential workflows while remaining citizens of their preferred ecosystems.
Mauricio also elaborated on Midnight’s economic design as a partner chain. Built initially on ada staking, Midnight extends Cardano’s security while introducing a dual token model with NIGHT as the value token and DUST as the computational resource. Over time, the team envisions incorporating multi-resource consensus ideas from Minotaur, allowing protocols to be secured not only by ada, but also by NIGHT and potentially other assets such as Bitcoin or Ethereum. In this model, holding NIGHT can effectively give builders and users ‘always-on’ access to Midnight’s privacy capabilities, while DUST accounts for resource consumption behind the scenes. This design seeks to align long-term economic sustainability with a simple user experience, where security, privacy, and interchain functionality are embedded in the background.
Building real-world demand and shared liquidity
Sheldon Hunt, founder and CEO of Sundial Protocol, brought a complementary perspective from the DeFi and layer 2 side. He described how tribalism is fading not only culturally but also practically, as multi-chain strategies become more viable. Historically, projects that attempted to operate across multiple chains struggled with liquidity fragmentation and conflicting expectations about loyalty to a ‘home’ ecosystem.
Today, improved tooling and a more cooperative mindset are making it easier to design network-spanning protocols. Sundial’s approach is to ‘stand on the shoulders of giants’ by leveraging Cardano’s security and EUTXO model while targeting Bitcoin DeFi. Rather than issuing a new token, Sundial focuses on unlocking latent value in existing assets, such as bitcoin, ada, and, eventually, Midnight’s NIGHT and DUST. With an estimated majority of bitcoin sitting idle, even directing a small fraction into secure, Cardano-connected DeFi represents a commercially significant opportunity – and a concrete example of how interchains can translate into real economic demand.
From the cross-chain infrastructure side, Dr. Weijia Zhang of Wanchain (WAN Bridge) underscored both the opportunities and the remaining challenges. Blockchains, he noted, were originally designed as silos, not as peers in a conversation. Wanchain’s mission has been to change that by building three main types of bridges: messaging bridges that transmit data and events, token bridges that enable asset transfers, and command bridges that let a transaction on one chain trigger execution on another.
Yet security remains the primary concern. It is relatively easy to build a bridge, but extremely difficult to make it robust enough to withstand sophisticated attacks, especially when chains differ in finality models, cryptographic curves, and smart contract semantics. Zhang pointed to ongoing work on interoperability standards, common network identities, and open-source reference implementations as critical steps toward safer, more predictable interchain systems. He also flagged emerging challenges, such as quantum resistance and the need to design bridges that can evolve alongside the cryptographic foundations of the chains they connect to.
A connected future for Cardano
The session closed with a forward-looking discussion on what a multi-chain world might look like within the next five years. Some participants envisioned a mesh of sovereign networks unified by shared primitives. Others predicted a modular architecture in which specialized systems plug into Cardano for security, liquidity, or privacy. Across these perspectives, one theme was consistent: Cardano’s commitment to research-driven development positions it to lead this transition, not by absorbing other ecosystems, but by enabling them to interoperate safely.
Interchains shift Cardano beyond a single-network paradigm. It lays the groundwork for a blockchain ecosystem where assets can move freely, applications can consume data and functionality from multiple networks, and partner chains can extend Cardano’s capabilities without diluting its security model. If Ouroboros defines how Cardano reaches consensus, interoperability defines where that consensus connects.
Cardano R&D sessions continue on the first Tuesday of each month, bringing together researchers, engineers, and ecosystem contributors to explore the technologies shaping Cardano’s long-term future.
