Someone asked me what I think about Midnight in DM, here’s roughly what I said, noting there are still a lot of things unclear so apologies for any misunderstandings. Just tweeting off the cuff here:
It’s a separate blockchain that will be fully interoperable with Cardano, delivering on the original whiteboard vision. It will be one of many such similar partner chains. ADA holders will get airdropped tokens, which - although tokenomics are unclear so this is jumping the gun a little - helps Midnight to start in a decentralised way unlike your average VC chain, as it simply partly copies the holder base of Cardano. Clever. Cardano SPOs will get to run the network and benefit, which makes them more sustainable in the long run (good for Cardano) and also enhances yield for their stakers (good for stakers). But Midnight consensus is not limited to Cardano SPOs, others who don’t have anything to do with Cardano could similarly get involved. It’s partnership, not marriage. Bridging back and forth between Cardano and Midnight will be easy, and presumably token standards will be identical. There will be a use of Babel fees for bridging, so if you move 100 DUST over you receive say 99.99 DUST on the other end, but likely spend no ADA. Liquidity will flow back and forth between the two chains, but could also flow from Midnight (and other future partner chains) to Polkadot or Ethereum. While Midnight can probably mint its own assets (I assume it’s multi asset, there was reference to DUST and some other non-privacy preserving token), you likely start to see Cardano becoming the source of deep liquidity not just for Midnight but many other interconnected blockchains, all the while enhancing its own dapp and defi ecosystem and furthering its agenda on scaling, governance etc. A large percent of DUST may be held as a Cardano native token on Cardano’s L1. Cardano grows economically. As Cardano SPOs lay at the foundation not just for Midnight but many other chains, more and more of these tokens will start to be traded in Cardano token markets. Like many other chains trade as ERC20s (LINK, SHIB, MATIC, QNT etc), the status of the Cardano Native Token grows. Decentralised liquidity for these will always be deepest on Cardano. For instance, USDM may be minted and live on Cardano, then get bridged over to Midnight, but if a person holding significant amounts of it on Midnight wants to swap them or tap into the deepest source of liquidity for it, they’ll have to move it back to Cardano. If a person holding DUST wants to get some WMT, they’ll need to head over to a Cardano DEX. There will be many partner chains, we will all come to own them. This is just the start, and in the end Cardano will be the main spider in this web where economic value settles. A deeply liquid decentralised digital asset hub. ADA holders get to benefit and grow along as the partner chain network grows, SPOs benefit, and you could also see Midnight as one huge Cardano app.. (from the Cardano perspective). The ecosystems aren’t tied programmatically, but are heavily tied economically and socially. And the more I think about it the more I like that. Just my take.
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