Scaling DeFi on Cardano with Purpose: CEO Matteo Coppola on FluidTokens’ Vision

Cardano isn’t usually the first place people look for DeFi innovation. But projects like FluidTokens are beginning to challenge that assumption, focusing on fundamentals like decentralization, fee stability, and long-term scalability.

That vision starts with Aquarium, FluidTokens’ system for making Bitcoin usable within Cardano DeFi. It introduces Babel Fees, which allow users to cover transaction costs with any Cardano Native Token—including bridged Bitcoin—without needing ADA. Then there’s Midgard, a lightweight roll-up designed to speed up transactions while still relying on Cardano’s base-layer security.

In this Q&A, we speak with FluidTokens’ CEO, Matteo Coppola, about what they’re building behind the scenes—from a new lending protocol to a broader vision that touches Bitcoin, real-world assets, and more.

Building Where It Counts—Why Cardano Is More Than a Home Base

BeInCrypto: Building on Cardano is often overlooked in the Ethereum-dominated narrative. What strategic advantages has Cardano offered FluidTokens, beyond the usual talking points around fees and uptime?

Matteo Coppola: Ethereum had the first-to-market advantage in the smart contract economy, and its Account Model was therefore used as the standard for many years. Cardano instead keeps the original Bitcoin architecture, expanding it to allow proper UTXO smart contracts.

Now that the general web3 community is facing the limitations of the Account Model, UTXO-based blockchains can show a better alternative, all properly connected by Cardano.

Cardano offers FluidTokens an always online realistic decentralized environment that can properly bridge assets among UTXO blockchains such as Bitcoin and any Layer 2 that anchors its security to a UTXO Layer 1.

Additionally, Cardano has one of the most vibrant communities, where its numbers are not made by bots and wash trading but by the authentic interest of real people.

FluidTokens has been a leading DeFi ecosystem on Cardano since 2022. It is currently the only ecosystem that has deployed real DeFi protocols on Bitcoin layer-1, so it’s a no-brainer to keep supporting and improving Cardano.

BeInCrypto: The Aquarium Babel fees model introduces a different way of thinking about user incentives. What led you to design it this way, and what kinds of user behavior are you hoping it encourages?

Matteo Coppola: Blockchain is a core part of any Web3 stack—but end users shouldn’t be burdened by the complexities of transaction building or on-chain settlement. The experience should be simple, secure, and smooth.

This is impossible if the user has to own and manage ADA, the native currency that Cardano accepts, to execute transactions. For example, how can an average person know where to buy ADA, how not to get scammed, how to do an annoying KYC on a centralized exchange, how much to buy, and how to send it to their non-custodial wallet? All of this must be avoided if ADA is not necessary in his daily operations.

Aquarium allows users to pay transaction fees with custom tokens, such as stablecoins, in a fully decentralized way. An open market provides ADA to sponsor transaction fees in exchange for a certain amount of another token, allowing supply and demand to be met and simplifying the user experience.

Aquarium will also enable Bitcoin users to execute DeFi operations on Cardano without the need to own any ADA, officially enabling Cardano as a DeFi layer for Bitcoin.

BeInCrypto: Midgard plays a role in FluidTokens’ approach to scaling. How does it fit into your broader roadmap for expanding access to DeFi while staying aligned with decentralization?

Matteo Coppola: We are building Midgard in collaboration with Anastasia Labs to solve the Cardano fast-finality and low-fee issues that you inevitably meet when on any properly decentralized blockchain.

On Midgard, our DeFi products can become highly competitive with traditional ones, empowering real-time trading, video game economies, and daily retail payments.

Combined with Aquarium babel fees, the user experience starts to become pretty close to the old traditional system while keeping the most fundamental aspect—decentralization.

BeInCrypto: FluidTokens is rolling out a new lending protocol. Can you walk us through the core idea behind it and what specific problems you’re aiming to solve that other protocols haven’t addressed yet?

Matteo Coppola: The new FluidTokens lending protocol has been designed in a highly modular way to accommodate an impressive number of different types of loans. The objective is to apply a different flavor of lending to ensure all user categories find what they are looking for on both the lending and the borrowing sides.

Lenders, whether private individuals or institutions, can customize everything from interest rates and liquidity terms to installment structures, oracles, collateral types, liquidation settings, and even optional loan expiration. This level of configurability makes it easier for them to meet their highly specific requirements.

On the borrowing side, users are able to navigate easily among a plethora of different offers and even request specific loans to find the best deals worldwide. All of this is wrapped in an intuitive user experience with extensive automation to make the entire process as simple and efficient as possible.

Bringing RWA and Bitcoin into Cardano’s DeFi Game

BeInCrypto: Real-world assets (RWAs) have become a buzzword in DeFi, but real-world traction is still limited. From your vantage point, what needs to happen—technically and regulatorily—for institutions to engage meaningfully with on-chain collateral?

Matteo Coppola: The Web3 space enables access to markets that may normally be out of reach, while the fractionalization of RWAs creates opportunities for players of any size.

Traction is limited for at least two main reasons: older user generations tend to still use traditional web2 platforms to buy virtual assets, and clear legislation about RWAs is still absent in many countries.

In fact, as it often happens, the law lags behind technological progress, and institutions must adhere to strict compliance, missing out on RWA opportunities until an RWA-friendly iteration of the law is released.

At FluidTokens, we are working on our DeFi products anticipating the direction of this industry, enabling RWAs of any type to be used as collateral to get safe and immediate liquidity.

BeInCrypto: FluidTokens has expressed interest in bridging DeFi with Bitcoin. What’s the thinking behind that direction, and how do you see Bitcoin contributing to a more interoperable DeFi ecosystem?

Matteo Coppola: In 2024, FluidTokens released a technological framework called BitWeave to create proper DeFi protocols on Bitcoin L1 without the need to bridge assets to other blockchains.

The annoying issue is that on Bitcoin L1, you still have to face long transaction times and fee spikes that sometimes may hinder your DeFi experience. Additionally, the user experience highly depends on the limited Bitcoin scripting language.

Therefore, it becomes necessary to have a secure layer with more expressive programmability, where smart contracts can be executed on the UTXOs that contain your assets (BTC, Runes, Ordinals, and more).

As it turns out, from a cryptographical perspective, the safest and most trustless way to bridge the huge Bitcoin liquidity into the DeFi world is through a UTXO blockchain such as Cardano. We are actively working on this aspect, contributing alternatives to the solutions that have been proposed so far.

Moreover, from FluidTokens’ perspective, we wanted to unify our ecosystems, which currently exist on Cardano and Bitcoin, to simplify the user experience. In an ideal Web3 world, any BTC holder should be able to connect their wallet and participate in DeFi protocols earning yield without realizing that there’s a trustless bridge and that he is currently on another chain.

What DeFi Needs Now and Next: Privacy, Integrity, and Purpose

BeInCrypto: As DeFi evolves, the tension between privacy and compliance is intensifying. Where does FluidTokens draw the line, and how should the industry think about privacy amid increasing surveillance?

Matteo Coppola: DeFi has the unique ability to exist among all possible degrees of privacy and compliance. The core idea we must always follow is to protect our digital assets accepting compliance procedures only when they are strictly necessary.

For example, a peer-to-peer economy should fully protect privacy and freedom, while to borrow stablecoins from an institutional provider, we necessarily need to adhere to anti-terrorism rules and accept a KYC procedure. To improve the situation even more, Zero-Knowledge proofs allow to prove KYCs and KYBs without disclosing the actual personal information.

On top of that, blockchains like Midnight can hide all the transaction details allowing businesses to be privacy-compliant and protected from competitors’ on-chain analysis. This is why FluidTokens is also building on Midnight: the users, the businesses, and the institutions can find the proper way to provide and borrow liquidity, scaling the opportunities on web3 without compromising their business model.

BeInCrypto: On a more personal note—what kind of leadership do you believe this next chapter of DeFi demands, and how are you shaping FluidTokens’ culture to meet the moment?

Matteo Coppola: In the past crypto years, we have seen many fraudulent Web3 companies that sacrificed ethics and respect towards the community in order to extract all the possible value, FTX, for example.

Now instead, we often see all the major players being highly competitive, offering yields with tokens and derivatives that are safe until the current goes in the right direction. Still, they are actually a castle of cards where one wrong movement at the base can provoke a general collapse.

The new kind of leadership that DeFi needs is made of experts who really care about decentralization and fair financial opportunities, where the offered solutions solve real-world problems and facilitate a global financial world that is not uniquely made of memes and questionable digital currencies.

At FluidTokens, I push the team to work and fight to achieve Bitcoin’s original vision of a fair, accessible, secure, and transparent financial future.

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