What is Midnight (NIGHT)? The new privacy blockchain champion built with zero-knowledge proofs

Midnight is a privacy-first sidechain launched by the Cardano ecosystem, enabling selective data disclosure through zero-knowledge proof technology. The platform uses its own smart contract language, Compact, and the Kachina protocol, allowing developers to build apps that verify correctness without revealing sensitive data. Midnight integrates AI technology to accelerate KYC reviews and offers a self-service unfreezing tool for 17.5 million users.

The Fatal Paradox of Transparency and Data Privacy

Traditional blockchains face a fundamental dilemma: public chains like Bitcoin and Ethereum make all transaction details visible on the ledger, allowing anyone to track fund flows and transaction counterparts. This design excels in decentralization and verifiability but completely sacrifices privacy. Enterprises cannot tolerate having their supply chain data exposed to competitors, individuals don’t want their salary and spending records permanently public, and medical institutions certainly won’t put patient records on-chain.

Privacy coins like Zcash and Monero attempt to solve this issue but go to the opposite extreme: all data is completely hidden, making regulatory compliance nearly impossible. When banks or government agencies require proof of transaction legality, these systems cannot provide evidence and are thus rejected by mainstream finance. What is Midnight (NIGHT)? It’s the first blockchain platform that truly solves this dilemma.

Midnight breaks the deadlock through a selective disclosure mechanism. Users and enterprises can keep sensitive data private but selectively reveal specific information to regulators, auditors, or transaction counterparts when necessary. This capability is based on the mathematics of zero-knowledge proofs (ZKP), allowing you to prove a fact without disclosing the secret itself. For example, you can prove “I am over 18 years old” without revealing your exact date of birth, or prove “this transaction complies with anti-money laundering regulations” without exposing the transaction amount or counterparty identity.

Three Core Technical Pillars of Midnight

Zero-Knowledge Proofs: Mathematical Guarantees of Privacy

Midnight employs zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) as its core cryptographic tool. This proof system allows a prover to convince a verifier that a statement is true without revealing any additional information. Specifically, Midnight uses the Halo 2 proof system, a recursive SNARK implementation based on Plonk, with three major advantages: no trusted setup required, proof files are only a few hundred bytes, and verification is extremely fast.

Zero-knowledge proofs are applied everywhere in Midnight. Every confidential transaction is accompanied by a proof that shows the network “the sender has sufficient balance, the signature is valid, and there is no double-spending,” but without revealing specific amounts or identities. Smart contracts can require users to submit proofs to verify qualifications, such as “I hold a valid credential” or “my credit score is above 700,” without viewing the original documents. This capability enables Midnight to support application scenarios that are impossible on traditional blockchains.

Kachina Protocol: A Unified Framework for Private Smart Contracts

Kachina is the underlying architecture for Midnight’s smart contracts, originating from IOHK’s cryptographic research. The protocol divides contract state into public and private parts. Public state is on-chain and visible to all, while private state is maintained locally by the user. When a user performs an operation, they update their private state locally and generate a zero-knowledge proof to submit to the blockchain, proving the action complies with the contract rules.

Kachina’s breakthrough lies in its Universal Composability (UC) security model. This formal framework ensures that even if multiple smart contracts run simultaneously or attackers attempt interference, privacy guarantees remain effective. This “plug-and-play” security enables developers to compose different Midnight contracts without worrying about security vulnerabilities from complex interactions. In addition, Kachina supports concurrent execution, allowing multiple users to interact with contracts simultaneously, greatly increasing throughput.

Compact Language: Development Experience with Privacy by Default

Compact is Midnight’s dedicated smart contract language, designed with the philosophy of “privacy by default.” All data is considered private by default, and developers must explicitly use the disclose() function to make any information public. This design fundamentally prevents accidental data leaks. The compiler checks all data flows at compile time and will immediately throw an error if unauthorized disclosure is attempted.

Compact’s syntax is inspired by TypeScript, lowering the learning curve. The compiler outputs JavaScript/TypeScript API definitions and cryptographic materials required for zero-knowledge proofs, enabling seamless integration for frontend developers. Developers only need to focus on business logic, while the framework automatically handles the complexity of proof generation and verification. Additionally, a VSCode extension provides syntax highlighting, real-time validation, and contract templates, further enhancing the development experience.

Four Killer Application Scenarios

Private Voting Systems: Voters verify eligibility (such as citizenship) using zero-knowledge proofs, and encrypted ballots are submitted on-chain. The tallying process uses zero-knowledge aggregation technology, allowing the final results to be publicly audited, but no one can trace individual ballots. This solves the trust issues of traditional electronic voting.

GDPR-Compliant KYC: Users submit identity documents to a trusted party and receive verifiable credentials. They can then use zero-knowledge proofs to show service providers “I have passed KYC” or “I am not a US resident” without revealing sensitive data like passports or addresses. This enables DeFi protocols to operate compliantly while protecting user privacy.

Enterprise Supply Chain Management: Companies can track goods movement on Midnight while encrypting supplier identities, pricing, and inventory quantities. Competitors cannot spy on business secrets, but auditors can verify compliance via decryption keys. This opens the door for enterprise blockchain applications.

Confidential Asset Trading: High-value assets like real estate or art can be tokenized and privately transferred on Midnight. Transaction history is verified by a chain of proofs, but the identities of buyers and sellers and transaction prices are hidden from the public, only disclosed to authorities when legally required.