Midnight Network: Application Focused Chains with Privacy-First DApps with ZKPs You Should Know About

What is Midnight?

Midnight is a privacy-first blockchain developed by Input Output (the team behind Cardano) that enables developers to build decentralized applications where sensitive data stays private while remaining verifiably correct.

The core innovation: Midnight blends public verifiability with confidential data handling through zero-knowledge (ZK) proofs and selective disclosure. You can prove your app works correctly without exposing the underlying data. Purely built as a data-protection–focused blockchain ecosystem it is designed as a sidechain of Cardano. Built to enable confidential smart contracts and selective data disclosure. Unlike many privacy chains that prioritize full anonymity by default, Midnight introduces programmable privacy — allowing users and enterprises to control what information remains private and what can be disclosed for regulatory or compliance purposes. This makes it particularly attractive for regulated industries such as finance, healthcare, and enterprise SaaS, where confidentiality and auditability must coexist.

In contrast to competitors like Monero, which focuses on transaction-level anonymity, or Zcash, which centers on shielded transactions, Midnight extends privacy into smart contract logic itself. Its integration with the Cardano ecosystem also allows interoperability and scalability advantages not typically available to standalone privacy chains, positioning Midnight as a privacy-first but compliance-aware blockchain infrastructure rather than a purely anonymous cryptocurrency network. This could increase potential usecases of Midnight beyond just shielding transactions.

Why Midnight Matters for Developers

Traditional blockchains expose everything. Midnight gives you granular control:

Feature	Traditional Chains	Midnight
Transaction data	Fully public	Selective disclosure
User identity	Transparent	Privacy-preserving
Smart contracts	Public execution	Confidential execution
Compliance	All-or-nothing	Selective disclosure

Use cases ideal for Midnight:

• DeFi with privacy: MEV-resistant trading, private order books
• Healthcare DApps: Patient records that prove validity without exposure
• Voting systems: Verify results without revealing who voted what
• Credential verification: Prove eligibility without exposing personal data
• Supply chain: Track provenance while protecting business secrets

Core Technical Concepts

1. The Dual-Ledger Architecture

Midnight maintains two synchronized ledgers:

Public Ledger: Transaction commitments, Merkle roots of private state, anyone can verify correctness

Private Ledger: Actual data (balances, user info), only accessible to authorized parties, shielded by ZK proofs

The magic: Public ledger stores commitments (cryptographic hashes), not raw data. Valid transactions prove these commitments are correct without revealing contents.

2. Selective Disclosure

Users control what they reveal:

// A user can prove:
// "My balance is > 1000" → reveal YES/NO
// "My age is > 18" → reveal YES/NO
// "I am a verified user" → reveal status only

// But the actual values remain hidden
balance: 5,847.32 USDT (private)
proof: "balance > threshold" → true (public)

3. Kachina: The Proving System

Midnight’s Kachina proving system converts private computation into verifiable proofs. It enables:

• Private execution: Code runs off-chain, only proofs hit the chain
• Trustless verification: Anyone can verify correctness without seeing inputs
• Composability: Private contracts can interact with public ones

4. UTXO Model with Private State

Midnight extends Bitcoin’s UTXO model with private state elements (PSEs):

Traditional UTXO: Must reveal all to spend

Midnight UTXO with PSE: Only need to prove you know valid data

Compact: Midnight’s Smart Contract Language

Compact is Midnight’s purpose-built smart contract language. Syntax resembles TypeScript, making it accessible for web developers.

Example: Simple Counter Contract

pragma language_version >= 0.16;
import CompactStandardLibrary;

// Public state - visible on-chain
export ledger round: Counter;

// Transition function - changes public state
export circuit increment(): [] {
    round.increment(1);
}

Key Compact concepts:

Concept	Description
ledger	Declares on-chain state (public or private)
circuit	Defines executable functions that modify state
export	Makes functions/state accessible externally
import	Includes standard library or custom modules

Example: Bulletin Board (Identity-Aware Rules)

pragma language_version >= 0.16;
import CompactStandardLibrary;

// Public: message list
export ledger messages: Map<Index, Message>;

// Private: post ownership tracking  
export ledger posts: Map<Index, PostOwner>;

// Anyone can post (public state)
export circuit post_message(content: ByteArray): [] {
    let index = messages.length();
    messages.push(Message { content, timestamp: now() });
}

// Only author can delete their own post
export circuit delete_message(index: Index): [] {
    // Private ownership check
    let owner = posts.get(index);
    require(owner == tx.sender);  // Proves ownership without revealing identity
    messages.remove(index);
    posts.remove(index);
}

Development Workflow

1. Environment Setup

# Install Midnight CLI tools
npm install -g @midnight/nightly-cli

# Initialize project
nightly init my-privacy-dapp

# Install dependencies
cd my-privacy-dapp
npm install

2. Toolchain Components

Tool	Purpose
nightly CLI	Project management, compilation, deployment
Compact compiler	Transpiles Compact → ZK circuits
Docker proof server	Generates zero-knowledge proofs locally
Lace wallet	Browser wallet for testnet interactions
VS Code extension	Syntax highlighting, auto-completion

3. Local Development Cycle

1. Write Compact contract
2. Compile: nightly compile
3. Test locally: nightly test
4. Generate proofs (Docker)
5. Deploy to testnet: nightly deploy
6. Interact via frontend/wallet

4. Testnet Access

# Configure for testnet
nightly config set network testnet

# Get testnet tokens via faucet
nightly faucet

# Check balance
nightly balance

Example Projects (Open Source)

Midnight provides reference implementations:

1. example-counter

“Hello, World” of privacy DApps

• Minimal contract demonstrating public state
• Full dev cycle: write → compile → deploy → transact
• Perfect starting point for learning Compact

git clone https://github.com/midnightntwrk/example-counter
cd example-counter
npm install
nightly compile
nightly deploy

2. example-bboard

Privacy-preserving bulletin board

• Demonstrates combining public + private state
• Identity-aware access control without identity revelation
• Pattern for any app needing permissioned actions

Privacy Engineering Fundamentals

For developers new to zero-knowledge cryptography:

Key Concepts to Master

1. Commitments: Cryptographic binding of data without revealing it
   Example: commitment = hash(data + randomness)
2. Nullifiers: Prevent double-spending/replay attacks
   One-time-use proofs linked to commitments
3. Merkle Proofs: Efficient verification of membership
   Prove “X is in set S” without revealing all of S
4. ZK-SNARKs vs ZK-STARKs: Different proof systems
   Midnight uses optimized variants for performance

Learning Path

Week 1-2: Blockchain fundamentals + Privacy concepts
Week 3-4: Compact language basics
Week 5-6: First contract (example-counter)
Week 7-8: Privacy patterns (example-bboard)
Week 9+: Build your own project

Resources:

• Midnight Academy – Structured learning
• Developer Documentation
• GitHub Examples
• Discord Community

What’s Coming: Testnet Updates

Midnight is in active development. Recent updates:

• Testnet-02 Transition: New testing environment preparing for mainnet
• Mōhalu Phase: Upcoming milestone with protocol improvements
• Open Source Push: Core components being released progressively

Stay updated via Dev Diaries and Discord.

Getting Started Checklist

1. Review Midnight documentation
2. Complete Academy modules
3. Set up development environment
4. Clone and run example-counter
5. Modify the counter contract
6. Clone example-bboard and understand privacy patterns
7. Build your first original project

Final Thoughts

Midnight represents a shift in how we think about blockchain privacy. Instead of “transparent or nothing,” it offers rational privacy — reveal what you must, hide what you can.

For developers, the learning curve is manageable (Compact is TypeScript-like), the tooling is maturing, and the use cases are genuinely valuable.

The privacy economy is coming. Midnight gives you the infrastructure to build it.