One of the key features of Cardano’s architecture is the ability to deploy sidechains. These are essentially separate blockchains, which can interact with the main chain, Cardano’s Layer 1 (L1), for specific purposes, allowing users to make transactions and execute smart contracts, and thus avoid scalability or functionality limitations, interoperating with other blockchains.
After more than four years of fundamental research and applied development, Input Output Global (IOG) announced Midnight, during the IO ScotFest in Edinburgh in November 2022.
What Is Midnight?
Know Your Customer (KYC) verification processes, to combat money laundering, (Anti Money Laundering: AML), terrorist financing and drug trafficking, can be a complex administrative burden to comply with the law for organizations in financial services, accounting, real estate and legal services.
Midnight is a Cardano sidechain solution designed to enable efficient, secure and cost-effective execution of smart contracts on Cardano, to manage business and personal data, giving users autonomy and control over their own information.
On most Web2-based platforms, users do not have authority and control over their own personal data.
On the other hand, in most blockchains, although the user has greater control over personal information, the visibility of transactions is maintained, and the possibility of identifying owners and funds.
Decentralized applications are transforming the way people interact and transact today.
Data protection smart contracts can use Zero-Knowledge Proof (ZKP) to improve existing procedural forms and unlock new applications, since with ZKP, there is no need to reveal any information to the customer other than truthfulness ( or not) of the statement. For these customers, this could mean that they could satisfy AML and KYC requirements without needing to capture, retain and safeguard personally identifiable information under regulations such as the European Union’s General Data Protection Regulation (GDPR).
Writer’s note: I understand that the main idea proposed by IOG for this development, and as one of the main applications, is to facilitate the task of companies required to comply with KYC regulations, and for people to be able to manage that information with greater privacy. The KYC regulation is a legal imposition of governments, and that is why I understand that the total content of the information encrypted with ZKP on the network must be able to be read, and managed, centrally by governments, otherwise they will not accept its use.
The Midnight programming model, including its domain-specific language and midnight.js client library, is an embodiment of ideas first published in the research paper Kachina.
Non Fungible Tokens (NFTs) are increasingly used to represent assets, credentials, receipts or even loyalty attributes, which can be tracked on a public ledger, leading to innovations in multi-party loyalty programs, cookieless e-commerce and the ability for customers to provide their own credentials to help organizations offer specific services or products.
Transaction metadata and wallet usage can be correlated to identify individuals and compromise their privacy, so Midnight’s data protection can allow tokenized assets to remain private.
Seeking Scalability On Cardano
There are two types of scalability that are sought with this development, and they are both the execution of smart contracts with specific functionalities outside the L1, as well as the growth in application developments with simpler programmability.
Midnight is designed to address some of the scalability and functionality limitations of the Cardano mainchain, allowing developers to build and deploy complex smart contracts that are not possible on the mainchain, supporting a wide range of widely used programming languages, including Typescript. This will simplify the development process for creating decentralized applications (DApps) in a simpler manner and allow more developers to be onboarded at a rapid pace.
Midnight is designed to be interoperable with other blockchains, through the use of bridges, allowing developers to create DApps that can interact with other ecosystems.
By using Zero-Knowledge cryptography, the platform will establish a trustless ecosystem, seeking to guarantee the security and confidentiality of sensitive personal and commercial data.
There are several types of ZKPs that differ in performance and cryptographic assumptions. Midnight uses ZK-Snarks to separate an app’s public and private data source, so that sensitive data remains on the owners’ systems or devices.
Organizations and developers can create privacy-preserving smart contracts with ease, as Midnight provides the tools necessary to build and run software, allowing for seamless integration with the platform.
Writer’s note: the privacy policy published on Midnight’s website states that “IOG collects several types of information for various purposes to provide and improve the Products for your use…”, “..which may include, but is not limited to: Email address, First name and last name, Phone number, Address, State, Province, ZIP/Postal code, City, Cookies and Usage Data..”, y que “…Your Personal Data may be used to contact you with newsletters, marketing or promotional materials and other information that may be of interest to you. You may opt out of receiving any, or all, of these communications by following the unsubscribe link or instructions provided in any email sent to you by IOG.”
Use Cases: Beyond Basic Functionality
The use cases for this personal information management technology are countless. I will mention some examples.
The evolution of Artificial Intelligence (AI) and Large Linguistic Models (LLM) depends significantly on training data, which comes from public information, which may be protected by intellectual property rights or licensed, without the means, in today, to equitably attribute use or copyright.
Second, as more AI-generated content is produced online, concerns will increase over the authenticity of the work and whether it is based on genuine or credentialed human contributors.
Finally, LLMs could be improved by facilitating access to data sets that are private or proprietary, but which their owners do not want, or cannot, legally share with third parties.
To address these challenges, IOG proposes Midnight as an application to help establish secure and private interactions with AI and LLMs to safeguard the confidentiality of data models and improve the reliability and quality of results, while maintaining the privacy of data sources, as required by law.
In the case of credit scoring, financial institutions require the disclosure of a large amount of personal information, with expensive processing and storage by the receiving organizations, with the risk of theft/hacking. Midnight’s ZK technology can verify a claim without revealing information outside of the claim itself. This feature is useful in decentralized credit scoring, where a credit score can be assigned to a digital identity without the owner of the identity revealing any other personally identifiable information.
In the case of voting, currently, a voter has to present identification to prove that they are qualified to vote and have not voted before. That identification can carry other information such as home address, date of birth, proof of funds in a certain cryptocurrency, or a simple attestation of a blockchain wallet that the voter may not want to reveal publicly. With a DApp that uses Midnight’s Zero-Knowledge technology, voters can demonstrate whatever they need without revealing unnecessary information.
A Devnet For Development
The Midnight devnet is the private alpha version of the future public blockchain, as a testing ground for development, to create and execute confidential smart contracts, and to familiarize yourself with Zero-Knowledge technology.
Midnight uses a language designed to integrate with TypeScript, familiar to thousands of developers, and has a plug-in for Microsoft Visual Studio Code.
The Midnight Software Development Kit includes:
- Visual Studio (VS) Plugin and Code Debugger
- Midnight SDK installer (tools to build and run software, including compiler and runtime)
- Development tools to test the node and wallet
- Smart Contract Utility Libraries and Example Projects
Interested developers can register to request access, and if selected by IOG, be able to participate in the Midnight network on the devnet.
Midnight is in development and some of its features are still being explored. Therefore, the devnet offers guests the opportunity to influence the Midnight product roadmap and share their desires and frustrations when working with sensitive data today.
The Team
Eran Barak CEO. Growth business builder with 20+ years of experience scaling and driving execution efficiency via the alchemy of strategy, business development, partnerships, and operations. Shown successful track record in launching start-ups and scaling lines of business. Experience with both small and large international franchises. A leader with strong people skills, operational insight, and storytelling talent. Formal education is a mix of technology (BSC Computer science) and business (MBA @ Northwestern).
Marta Szluinska Director of Operations. She tells us that her focus is on creating future-proof infrastructure that safeguards the essential freedoms of association, commerce and expression for developers, businesses and individuals. Claims to have a proven track record of success in the technology, defense and research sectors, from launching a new cybersecurity product for a major defense company to executing code data modeling and management initiatives open in the intelligent transportation sector, through the migration of applications from local environments to multicloud environments. He claims to have experience in Spring framework, AWS cloud, EC2, S3, Autoscaling, Aurora, Lambda, Route53, ECS, Azure, Active Directory, SQL, Kubernetes, Docker, Terraform, and more.
Meet the full team here.
Website: https://midnight.network/
