The upcoming Cardano-Bitcoin bridge, based on the Grail protocol, could be a first step towards providing decentralized finance (DeFi) applications secured by Bitcoin, documents for the bridge’s underlying protocol reveal.
On October 24, Emurgo, the development team supporting Cardano, announced that it was developing the bridge in partnership with Grail developer BTCOS.
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The post was deleted on November 16, but similar statements from Hoskinson were recorded by user X Al’O and shared via his channel.
Some Bitcoin users were skeptical that DeFi applications could be secured by the Bitcoin network.
Critics claimed that old “Bitcoin Layer 2s” did not allow users to withdraw their Bitcoin without the consent of the network operator and suspected that the new Cardano/Bitcoin hybrid network would be more of the same.
Yet Grail’s documents show that it allows Bitcoin users to opt out of Cardano without the consent of its validators.
Smart Contracts on Bitcoin
Grail was inspired by an earlier idea called “BitVM”, described by developer Robin Linus in a 2023 white paper.
The paper proposes that a Bitcoin “optimistic rollup”, similar to Ethereum’s optimism, basis or arbitrum, can be created by having a server that commits to a “0” or a “1” for each stored data bit. It states that simple games like chess, go or poker could be run on Bitcoin using this system.
The Grail white paper, released in April, noted that Grail “builds on the BitVM paradigm” and that the original BitVM system created billions of complex transactions that would ultimately make its bridge impractical to use.
To reduce complexity, Grail uses zero-knowledge (ZK) proofs to reduce the amount of data that must be stored on Bitcoin.
The end result is a system that allows users to deposit Bitcoins onto the Layer 2 network without needing to trust the security of that network. In this case, this means that users could withdraw their Bitcoin 
BTCUSD of Cardano even if Cardano nodes were taken over by a malicious actor.
Building hybrid apps can be time-consuming
Even once the bridge is implemented, developing Bitcoin-secured DeFi applications may take some time. In his now-deleted X post, Hoskinson said developers should be trained in Cardano’s Aiken programming language to create these hybrid Bitcoin/Cardano applications.
Since most Ethereum DeFi developers are trained in Solidity, this implies that new applications cannot be created by simply copying and pasting Ethereum ones. They will have to be written from scratch.
In the recording released by Al’O, Hoskinson said: “It’s going to be a huge amount of work, it’s very heavy work, and there’s going to be wallet integrations and all these things that need to happen.” He added that the work was worth it because “there’s $1.5 trillion in the Bitcoin space.”
Withdrawals can still be blocked
Cointelegraph spoke with Edan Yago, co-founder of Grail BTC OS developer. Yago said bridge withdrawals could still be blocked if 100% of its auditors collude maliciously.
“To take control of the Grail system maliciously, you will need to own 100% of the nodes,” he said.
Nonetheless, he said, it is “a stronger security assumption than Bitcoin,” since Bitcoin relies solely on the assumption that “the majority of miners (or hashing power)” are honest.
According to Yago, the bridge provides better security than current systems for pegging Bitcoin, and creating a more secure system is necessary because billions of dollars of capital are tied up in Bitcoin. He added:
“Most BTC today is latent because holders do not want to trust third-party centralized entities that bridge/encapsulate to other blockchains. We believe that a vault or bridge like Grail – secured by zero-knowledge cryptography and a network of Bitcoin miners – could be the most secure native crypto vault solution that holders will more easily rely on before to put their BTC to work.
OP_CAT as an alternative to Bitcoin DeFi
Grail is not the only solution that attempts to secure DeFi applications using the Bitcoin network. Another option, called “OP_CAT”, also claims to offer this benefit. However, this would require a soft fork of the Bitcoin node software, which some Bitcoin nodes are reluctant to do.
Despite this, StarkWare CEO Eli Ben Sasson advocated for the change and predicted it would go live “within the next 12 months.”
When asked about OP_CAT, Yago said its implementation “does not materially change the safety assumptions of the bridge.”
He is not in favor of adding OP_CAT to Bitcoin, as he believes it is “quite risky”. He said:
“OP_CAT can quickly become very cumbersome in terms of transaction size, and even chains like Fractal that have created a Bitcoin fork with OP_CAT enabled are finding that it brings its own complexities to resolve.”
Despite this, he said that if OP_CAT was implemented, it “might change the architecture of how one can perform zk verification on Bitcoin, but it (would not) materially change how the bridge works.”
