As blockchain technology advances, the industry confronts a significant challenge: balancing transparency with privacy. Many public blockchains reveal all transaction data, posing risks for both enterprises and individuals. This conflict has fueled discussions about whether decentralization requires compromising confidentiality.
Fahmi Syed, President of the Midnight Foundation, proposes a more promising direction. At Token2049 Singapore, he shared Midnight’s vision for “rational privacy” with BeInCrypto. Midnight employs zero-knowledge-proofs-based smart contracts to facilitate selective disclosure: the power to control what information is shared, when, and with whom.
Please briefly explain Midnight Network and how it differs from other privacy-focused blockchains.
Midnight is an innovative layer one blockchain that builds on advancements in zero-knowledge proofs. It features a dual-state, public-and-private ledger architecture that allows applications to authenticate sensitive data with cryptographic proofs.
Through zero-knowledge proofs and specially designed smart contract disclosure mechanisms, individuals, corporations, and machines can determine what they share, when to share it, and with whom. This concept of “rational privacy” embodies selective, programmable privacy that safeguards sensitive data by default while still allowing for necessary compliance and auditability.
Currently, most public blockchains are either transparent or pseudo-anonymous, but pseudo-anonymity does not equate to privacy; over time, identities and wallets may be exposed, tracked, or vulnerable.
How does your approach differ from previous attempts to add privacy to public blockchains?
Public ZK chains began with projects like Monero and Zcash, which demonstrated how zero-knowledge proofs could safeguard sensitive data. However, their tokens served as stores of value, raising compliance issues for both regulators and corporations adhering to KYC/KYB requirements.
The evolution continued with ZK rollups or ZK chains, initially aimed at scaling blockchain transactions before adding privacy features. Retrofitting privacy, however, risks exposing sensitive data.
At Midnight, we have integrated privacy into the network’s core, allowing for the protection of sensitive data and metadata while still ensuring on-chain auditability. This enables the creation of technologies and applications that maintain privacy without compromising compliance.
What is Midnight’s mechanism that enables both privacy and compliance?
Private data should not be stored on a blockchain. The optimal use of private data occurs when value is generated while the information remains under the owner’s exclusive control. This can be achieved through proofs and attestations, such as proofs of identity, ownership, or accreditation, which serve as keys granting access to various levels of a product, service, or network.
Today, valuable data is trapped in silos, largely untapped. Midnight aims to unify these silos to unlock shared value without risk of exposure. Instead of transferring raw data across networks, you can provide attestations or proofs that enable untrusted parties to collaborate in a trustworthy manner. Thus, Midnight represents a truth layer; through our smart contracts, you can allow disclosures or enable multiple parties to validate information safely.
With Midnight, you have the autonomy to choose what, when, and with whom to share information. Many perceive privacy as an attempt to obscure or shield data, but we view it as a starting point for compliance. Privacy with selective disclosure enhances compliance.
Midnight uses a dual-component tokenomics system with NIGHT and DUST. What motivated this design choice, and how does it address the economic challenges facing other Layer-1 blockchains?
The economic model for many blockchains today is not only confusing but flawed. For instance, you wouldn’t pay for a Samsung phone with Samsung shares since they are investments, while your phone is a product or a “consumable.”
In ecosystems like Ethereum, Cardano, and Solana, the tokens used for investments are also the same ones required for transaction fees or “gas,” leading to counterintuitive scenarios. If token prices rise, transaction costs surmount, particularly during network congestion, resulting in users consuming their investment to conduct transactions and potentially stalling the network.
Midnight has decoupled ownership and utility from consumption. NIGHT serves as our native utility token, conferring ownership and governance over Midnight. NIGHT can generate DUST, a renewable, shielded resource that decays within seven days and does not serve as a store of value. Users pay transaction fees with DUST instead of NIGHT, ensuring that your primary asset is not depleted to use the network.
The Glacier Drop has attracted significant attention in the community. Can you share its main objectives and how it supports Midnight’s vision?
We are immensely confident in our technology, so we are distributing 100 percent of the NIGHT token supply through a multi-phase process starting with the Glacier Drop, open to users across eight major blockchain ecosystems. If you held at least $100 worth of BTC, ETH, ADA, SOL, AVAX, BNB, XRP, or BAT tokens in a self-custody wallet on the snapshot date, you are eligible to claim. The amount of NIGHT you can claim corresponds to your holdings in the other eligible chains; the more you possess, the more NIGHT you’ll receive. Participants can claim their tokens before we expand this opportunity to everyone during the Scavenger Mine phase.
Scavenger Mine allows anyone from any ecosystem to claim a portion of unclaimed tokens from the Glacier Drop. Only after Scavenger Mine concludes will there be distributions to the Midnight Foundation, the on-chain treasury, and on-chain reserves.
You recently announced a collaboration with Google Cloud. How does this partnership advance Midnight’s enterprise adoption goals, and what does it mean for bringing traditional Web2 companies into the blockchain space?
Yes, our collaboration with Google Cloud is enhancing the enterprise-grade infrastructure for our network, instilling greater confidence among institutions and others to use Midnight’s privacy-enhancing capabilities. Through this partnership, millions of users and thousands of corporate clients can utilize Midnight’s technology to integrate enhanced privacy into their products and services.
Can you elaborate on this partnership with a real-world example?
A healthcare organization in Turkey with three million patients is currently collaborating with us to explore how blockchain infrastructure can generate proofs of their patients’ medical histories. We aim to first partner with organizations facing slightly lower regulatory hurdles for proofs of concept. Once viability is demonstrated, we can expand to other sectors. For instance, we are now engaging with a large hospital in California interested in using Midnight for cross-clinical trials with external partners to protect sensitive patient data, aiming to merge diverse silos of medical history and records to improve outcomes without exposing data on-chain.
Can you walk us through Midnight’s roadmap from testnet to mainnet launch? What are the primary milestones and goals for the rest of 2025 and beyond?
This year’s primary objective is to successfully complete the Glacier Drop, launch our token, and prepare for the mainnet launch. Following that, we will focus on market introduction while pursuing decentralized pathways. To establish institutional confidence, we will initiate launch with a consortium of federated nodes comprising ten trusted partners operating validators, ensuring the robustness, speed, and scalability required for secure and confident enterprise operations.
As we develop, through feature releases, upgrades, and growing transactional volume driven by partners, Midnight will steadily transition into a decentralized ecosystem. To facilitate this, a parallel incentivized testnet will run alongside the federated mainnet upon mainnet launch. Ultimately, these two will integrate, forming a fully decentralized blockchain where validation extends beyond trusted partners to a broader group of 100 to 200 validators.
