Midnight By Cardano

On November 18, 2022, Input Output Global Inc. (IOG), the company behind the Cardano blockchain, announced that they are working on launching a new sidechain called Midnight with a native token DUST. The main feature of the new chain is the focus on data protection: it will use zero-knowledge-proof (ZK protocol, ZKP) technology.

What is zero-knowledge-proof?

ZKP first appeared in computer science and cryptography, and now it is being used in blockchain. The main principle of the protocol’s work is verifying information with minimum knowledge shared between the parties. This helps with security: for example, someone demonstrates that they know a password without stating the password itself, but instead revealing some characteristic of it, just enough for another party to verify. 

There are two main principles: completeness (the prover can show that they know the information with high probability) and soundness (the verifier has to be capable of determining the possession of the information accurately).

The protocol tries to get rid of the drawbacks of other authentication ways, such as hacking, loss of control of user data, etc. That is why the protocol is widely used when security and privacy are essential.

Midnight is not the first project to utilize ZKP; other examples include Monero (XMR) and ZCash (ZEC). 

What is Midnight?

According to Charles Hoskinson, Input Output Global’s CEO, Midnight is going further than the privacy-coin projects mentioned above; it is going to allow developers to create DApps with enhanced protection of information to defend companies and individuals from leaks or censorship of their data. 

The company is planning to achieve this using zero-knowledge-proof smart contracts. By doing so instead of making the chain anonymous by default the team plans on balancing the safety and the opportunity for audit. The goal is to prevent financial manipulation and crimes while still allowing for privacy.

What is also important, the company wants to enable developers to use “a normal programming language”, for instance, Java Script instead of zk-SNARKs, or as the IOG founder called them in an interview, “some weird Snark thing”. 

The project is planning to work with businesses. They are collaborating with the Hyperledger consortium, an entity where large companies use blockchain technologies for such tasks as supply-chain management.

The developers hope that Midnight is going to make the Cardano blockchain more valuable. They promised that those users who stake on the Cardano network will receive DUST in addition to the native ADA as an incentive.

Currently, the project is still in progress, the launch date has not yet been announced. IOG only disclosed that the work will be continued into 2023.

Midnight vs Monero

After the announcement by IOG, the privacy network Monero had some negative comments which the team shared on Twitter. They claimed that the opportunity for authorities to audit which was mentioned in the news about Midnight is essentially a “backdoor” for regulators which goes against the principles of privacy-first. This provoked a series of discussions between the members of the Cardano and Monero communities.

IOG later clarified that the initial announcement was misunderstood, and the regulators’ interference would only be possible if authorized. Monero later stated that it was unclear from the information on the project available at that moment, called off the accusations, and deleted the tweets.

Conclusion

The announcement of the Midnight sidechain together with its native coin DUST is a part of the fifth (and final as of now) part of Cardano’s roadmap called the Voltaire Era. The team plans to turn the network into a completely independent ecosystem during this stage of development. The project aims to achieve true decentralization and give the system’s participants the opportunity to decide the future of the network. 

All in all, the new privacy-coin project Midnight seems promising, and SimpleSwap will keep you updated on its developments.