Midnight is promoted as a fourth-generation blockchain, utilizing Zero-Knowledge Proofs (ZK Proofs) to safeguard user data. This makes it an excellent solution for companies needing to manage private data securely. Midnight’s ability to facilitate private transactions enhances its appeal. The IOG team is developing the Partner Chain Framework, with Midnight poised to be Cardano’s inaugural partner. Let’s explore the implications of this partnership.
What Is A Partner Chain
Partner chains will function as independent blockchains, each with its tokenomics, transaction logic, governance model, execution environment, and consensus mechanisms. They can mint their tokens without relying on Cardano.
The IOG team is developing the Partner Chain Framework using Parity’s Substrate. This framework aims to facilitate the creation of new blockchains within the Cardano ecosystem that can seamlessly interact with Cardano. The Cardano Assets and Settlement Layer (CASL) could potentially serve as the core of this infrastructure, utilizing various services from partner chains.
It’s important to note that users and businesses can access the services of partner chains independently of Cardano.
Stake Pool Operators (SPOs) in the Cardano ecosystem form one of the most decentralized infrastructures in the blockchain industry. SPOs will be able to operate nodes for partner chains, providing them with a new revenue stream. The Cardano ecosystem will offer decentralization as a service to partner chains, creating a crucial link between Cardano and its partners.
Midnight
Midnight is expected to be Cardano’s first partner chain. Focused on protecting user data by leveraging Zero-Knowledge Proofs (ZKP), Midnight will offer this service to users and businesses, and developers building on Cardano will also be able to utilize it.
Midnight is expected to feature a unique dual consensus mechanism that integrates Proof of Work and Proof of Stake consensuses (Minotaur). Midnight will enable users to send private transactions, akin to the capabilities of ZCash. Additionally, it can protect the intermediate states of any smart contract execution using a ZKP system (Kachina). It will be capable of programmable data protection with selective disclosure.
Midnight will feature two tokens: NIGHT and DUST.
NIGHT, an unshielded token, will be used for governance, consensus participation, and block production rewards. Initially, NIGHT will exist as a Cardano native asset. On the other hand, DUST will be a shielded resource token that powers chain activities, acting as the fuel for the network.
What Does It Mean To Be a Partner For Cardano?
The strongest connection between Cardano and Midnight will be their native interoperability feature. This will make it easy for developers to build services using both Cardano and Midnight features and for users to migrate seamlessly between the two chains. Users of Cardano services can access Midnight’s privacy services without even realizing they are using Midnight.
Some users may primarily use Midnight and remain unaware of Cardano. Conversely, Midnight could serve as an entry point into the Cardano ecosystem for others, depending on their needs.
From a broader perspective, most users might not adopt blockchain technology by holding tokens but by using various services, often without knowing which blockchains are involved.
Developers share a similar mindset, seeking the best solutions for their projects. For privacy-dependent services, Midnight could be the preferred platform.
The Chang hard fork introduced ZK cryptography to Cardano, allowing for the creation of projects similar to Midnight. However, Midnight will be a more advanced platform in terms of privacy, offering capabilities that Cardano cannot. For example, Midnight’s ledger supports both shielded and unshielded data primitives, enabling selective disclosure, a feature not available on Cardano.
Many people view Midnight as a competitor to Cardano, a notion likely stemming from the tribalism prevalent in the blockchain ecosystem, where all blockchains are seen as rivals.
Success in this space is closely tied to the network effect. If we could predict which blockchain will have the largest network effect in 25 years, we would know the winner. The network effect is crucial for transaction fees, which are essential for the long-term economic sustainability of any blockchain.
In the Ethereum ecosystem, we observe users migrating from L1 to various L2s. Some argue that L2s are parasitic on Ethereum regarding fees and users, while others believe that Ethereum benefits from the overall strengthening network effect of the ecosystem. Both perspectives hold some truth.
It’s also evident that if the blockchain industry succeeds, multiple blockchains will thrive, interconnected and offering diverse functionalities. Each major blockchain could have millions of daily users. Midnight will provide privacy not only to the Cardano ecosystem but also to other blockchains. This will bolster the success of the entire industry, not just a single ecosystem.
Partnerships are typically formed out of mutual necessity, ideally resulting in benefits for both parties. Initially, Midnight will rely on Cardano for decentralization, which will be advantageous for SPOs. Meanwhile, users of Cardano-based applications can leverage the privacy services offered by Midnight.
Our objective should be to achieve mass adoption. By combining different components, much like assembling Lego pieces, we can create a comprehensive service that could become the highly sought-after killer app in the crypto space.
Midnight is a partner that will introduce new functionality to the Cardano ecosystem, much like other partners who can add additional features. Midnight’s contributions will be beneficial for Cardano.