Cardano News Today: Midnight Token Plummets 80% as Retail Hype Fails to Offset Liquidity Woes

Charles Hoskinson, founder of Cardano, is promoting his latest project, Midnight Protocol, as a cross-chain privacy infrastructure. The platform, built on zero-knowledge proof technology, aims to enable compliant privacy on competing networks like Bitcoin and XRP. Hoskinson argues that Midnight could redefine how privacy and compliance interact in decentralized finance.

He described Midnight as more than a sidechain for Cardano, positioning it as shared infrastructure that enhances rival blockchain ecosystems rather than replacing them. By expanding privacy to other blockchains, Midnight could unlock new institutional use cases, such as real-world asset tokenization.

Market reactions have been mixed. While the NIGHT token briefly trended above Bitcoin and Ethereum, its price has dropped sharply since launch. Retail interest has surged, driven by speculation and high visibility, despite significant volatility.

Why the Strategy Matters

Hoskinson's vision for Midnight is rooted in collaboration rather than competition. He claims the protocol complements existing blockchains, rather than displacing them, by offering privacy at scale. "Midnight makes what it touches better," he stated on X, arguing that integrating the protocol with XRP DeFi could disrupt legacy banking systems and enable private transactions on Bitcoin.

The strategy also aligns with broader ambitions for Cardano. Hoskinson suggested that Midnight could boost the platform's DeFi ecosystem, leading to higher monthly active users, transaction volumes, and total value locked. He believes Cardano will be the first to introduce private DeFi at scale, potentially drawing institutional interest.

Midnight's architecture is built on zero-knowledge proofs, a technology that allows for data verification without exposing the underlying information. This approach could offer privacy while maintaining regulatory compliance, a key concern for institutional adoption. Hoskinson emphasized the need for "end-to-end strategies" in a market where partial solutions fall short.

Market Reactions and Volatility

The launch of the NIGHT token has been marked by intense volatility. Despite initial enthusiasm, the token has fallen by over 80% in just weeks, trading near $0.08. Analysts attribute the sharp decline to oversupply, airdrop selling, and broader crypto market weakness. The token's circulating supply of 16 billion units overwhelmed liquidity, exacerbating the downward pressure.

Despite the price drop, NIGHT remains a top topic of conversation among on-chain communities. Social engagement has surged, with the token frequently mentioned in discussions about cross-chain privacy. However, critics have questioned the long-term viability of airdrop-driven distributions and the structural challenges facing newly launched tokens.

CoinGecko data showed that NIGHT briefly outpaced Bitcoin and Ethereum in search volume, signaling strong retail interest. Yet, the token's performance has been inconsistent, with trading volumes fluctuating wildly. Analysts warn that short-term volatility is expected, particularly in an environment where market conditions remain fragile.

Risks and the Road Ahead

The success of Midnight depends on widespread adoption and integration with major blockchains. While the project has generated buzz, practical implementation and institutional buy-in will determine its long-term impact. Critics argue that the protocol's benefits may be overstated, and that competing platforms are already making strides in privacy-focused DeFi.

Hoskinson has also drawn attention to the $10 trillion real-world asset tokenization market, suggesting that Midnight's privacy-preserving design could open new avenues for institutional participation. However, the market remains cautious, with many still favoring permissioned blockchains like the Canton Network.

Looking ahead, the Cardano ecosystem will need to demonstrate tangible progress in DeFi growth and user engagement. If Midnight gains traction, it could position Cardano as a leader in cross-chain privacy solutions. But for now, the path forward remains uncertain, and market participants will be watching closely for signs of adoption.