Hi, this is Charles Hoskinson from warm, sunny Colorado. Today is March 23rd, the week of the 23rd, and it shall be known as the Midnight Week. We're having a lot of fun, doing a lot of work, and we're slowly and methodically getting Midnight turned on, which takes quite a bit of time and effort. This time around, we have a lot of partners, and I'm very excited that those partners and collaborators, FNOs, operators, and others are working with us. I wanted to make a video to talk about what's going on for the next few weeks and give everybody a sense of what it takes to land the shuttle.
Launching a cryptocurrency is kind of like landing the space shuttle. If you remember back in the day, you'd have a usually badass pilot from the Navy or Air Force flying this thing, coming down at 30,000 miles an hour, and somehow landing on a runway like a plane does, with no one dying. It's truly extraordinary when you think about it, but they make it look pedestrian.
When you launch a cryptocurrency, there's usually a process of guarded staging, and there are layers to it. In the beginning, there was the testnet, where you learn a lot and gain many ideas. Eventually, you break a lot of stuff. The goal of the testnet is to break and learn, and to train people to work with it, whether they are developers, SPOs, or others. This ran in various formats for about a year, and we upgraded it many times. We demonstrated we could hard fork, and developers were on it, having fun. But at some point, you have to leave the nest. The bird has to be kicked out, and if it doesn't die on the pavement, you get to a federated launch.
You could go straight to pure decentralization, and in 2026, that's a super bad idea, but usually, the testnet goes to a federated launch. You have this concept of FNOs, federated node operators. This time around, instead of Emergo and Input Output, we have partners like Google Cloud, Telegram, and MoneyGram. These amazing operators run the network. At this stage, they make the blocks step by step, process transactions, and initiate hard forks.
Back in the Cardano days, during the Byron era, we had Ouroboros BFT, which involved three entities: the Cardano Foundation, Emergo, and IOHK, before we changed the name to IOG. That worked really well. During the Shelley era, we had the incentivized testnet, the ITN, where many learned to be stake pool operators. We transitioned gradually from Byron to Shelley using the concept of a D parameter. Midnight is a little more complicated because it operates simultaneously on Cardano and as its own network. There's a relationship between the two networks. The value-carrying asset lives here, Cnite, and the operational asset lives on Midnight. Midnight has four address structures, a private and a public ledger, and a layered consensus algorithm, or the grandpappy of Beefy.
This makes it much more complex than when we launched Cardano. This week, we're having the federated launch, which is basically the mainnet network turning on step by step. Every day, we have a go/no-go meeting. Based on feedback from the federated mainnet nodes, we receive a lot of information, testing vectors, and checkpoints. The goal is to achieve a stable network. Blocks are being made: your genesis block, your next block, and so on. It's guarded, meaning that transactions and dApp deployment are restricted. The aim is to ensure we have stable consensus. It is a mainnet, not a testnet, so ideally, there are no backsies.
On the consumer side, you should start seeing dust generation. The Cnite generation from the Cardano contracts is happening, and the Glacier drop period is over. Dust is starting to be generated, best represented by an update to Lace, where you'll be able to see that dust generation. Once we have a stable network, the FNOs like Google and Telegram will confirm that they are happy with it and that everything is running smoothly.
Then, we gradually lift the guard, similar to the D parameter, and start deploying waves of apps. We move from just dust generation to Lace plus dApps, allowing users to experience the network. For the first generation, because it's brand new technology with many different address structures and ways to use it, there must be tight synchronization between the two networks. We're looking for stable consensus and stable block generation in the mainnet environment. As stability increases, we gradually lift the guard and start deploying those apps.
The week of the 23rd is focused on getting the network turned on with our partners. We're going through a daily checklist and learning a lot along the way. Things are moving very positively. As we progress through the week, you'll see a Lace update. Next week, I expect the guardedness to drop, and some dApps to be deployed, meaning you can actually use them. This is not a testnet; it's the mainnet, which means that this will be hard-forked systematically, like Cardano, to add more capabilities and updates.
Right now, we need to achieve consensus, verify that Plonky Halo 2 are working as expected, and ensure compact is running. It's basically Zcash with smart contracts, which is pretty cool and exciting. Dust generation is a complex process, and we need to ensure it works correctly before deploying dApps that people can actually interact with. As we progress, we'll see things like ZKIR V3, composable contracts, and optimizations. We also have test harnesses for Nightstream, our lattice-based folding system.
As we work through these updates, which happen quarterly, we launched the token in December, and now we have the federated mainnet. This dramatically expands the set of dApps possible on the system. We started with none, and now we're at federated mainnet V1, with more to come. There's a cadence to turning these things on and verifying that they work, generating dust, and enabling capacity exchange. This will allow for cross-chain transactions and the midnight passport system, which is the abstraction system.
For stake pool operators, a natural question is when they will get involved. That will occur during phase three. We're entering phase two with the federated mainnet right on schedule, and phase three will create an incentivized testnet for SPOs to start making blocks, similar to what Google and Telegram are doing. If you were an ITN participant in Cardano, that's how it worked for you. This will run in parallel with updates to the federated mainnet, much like we did with Cardano and Ouroboros. The clock is running much faster this time.
In parallel, we will begin governance experiments. Instead of running sequentially, like we did with Shelley and Voltaire, there will be some parallelism. These governance experiments will explore how we do voting and address many open questions. One challenge with Midnight is that it was distributed with a glacier drop. While this is a huge benefit, it means we need time for the community to self-select before turning on any governance functions. We need to wait for the community to decide whether they want to be good faith members of the Midnight ecosystem or if they just want to dump their Cnite.
We gave Midnight to everyone, and no one paid for it. Thus, we need time for an ambassador class to form. Once we do that, we can conduct governance experiments. This is a spiral process that gradually becomes more complex over time. We'll start doing some experiments, and eventually, we'll have a full on-chain governance system. This will begin in phase three, alongside SPOs running the ITN.
As we open up functionality, we start simple and then scale up. In this phase, we're most interested in dust generation and loading dApps that test the network and verify that everything works as expected. We're also focused on improving developer experience. The developer experience will improve significantly once we have these elements in place.
We're excited about connecting Nightstream to the system, which also has to connect with the intense system. There is a lot to do over the next 6 to 12 months to gradually open up Midnight's capabilities. What's truly impressive is what's already been built. Midnight is running Kachina, Plonk, Halo 2, and we have compact. This is what's shipping with the federated mainnet, and it's the first time you can get Zcash with smart contracts.
Midnight is about triangles: abstraction, PET, and smart compliance. The Midnight passport program will be the foundation of smart compliance and part of abstraction. The PET part we're launching now is the ZK side, and later we'll have the MPC plus TEE components, allowing for outsourceable computation off-chain. Smart compliance will transition from a DID to a selective disclosure system.
The triangle is something you turn on step by step, making it simple and safe, providing rules for the entire system. Stability and resilience come from governance and decentralization, which have a spiral effect. Midnight started more than 8 years ago and left R&D 2 years into it. For about 6 years, we've been building and driving ourselves insane, and it's incredibly exciting to turn on Midnight this week. All signs point to success.
We do our go/no-go every day, and we knew that the week of the 23rd would likely be the week. It's exciting to see it happen. Stay tuned from the Midnight Foundation; they control the final clock. I'm optimistic, and everything seems to be functioning as we expected. This is the most complicated cryptocurrency ever built. It's the first blockchain that lets you keep a secret at scale for everyone, everywhere, and it's built for everyday people.
Abstraction is not just about more complicated smart contracts; it's about usability. It just works on your phone. You click a button, and it does what you want. You can trade regulated and unregulated assets in one framework. When you combine ZK, MPC, and TEE, you create a system that can prove properties everywhere, allowing everyone to bring their computer, making it infinitely scalable.
We learned from all the Cardano governance and decentralization. There are very few people who can land the space shuttle, but we know how to do it. We're moving at breakneck speed. Midnight is already one of the most traded tokens, with almost a billion dollars in volume today, and it's listed on Binance, the first Cardano native asset to do so.
With a large distribution, counting exchange airdrops and the drop, we have over a million users. It's easy to verify because there's KYC on the exchange wallets. As we get out of the equilibrium and stability of the federated launch, we will reach the next generation of contracts, enabling composability with private smart contracts. This unlocks the entire world of Midnight DeFi, which is super exciting.
We'll have many announcements at Consensus. It's been fun to watch everything turn on and evolve. The team's tired; they've been working 7 days a week for the past 2 months, productizing and transitioning the testnet to a mainnet. It's real, and it scares everyone. I've done it four times, and it never gets easier. It's always terrifying, even if you don't show fear; you feel it in your bones.
I'd like to thank the entire team and everyone who's been part of this journey. This is an 8-year journey, with 6 years of engineering and 2 years of hard R&D to solve amazing problems. This pursuit has involved so much brilliance and capability. I want to thank everyone at the Midnight Foundation for their hard work, all the partners and collaborators, the FNO operators, and all the Input Output employees throughout the years.
I fondly remember when we were in Scala, not Rust, using our own framework, with Brian McKenna as the product manager. That was a long time ago, but it mattered just as much then as it does now because we learned a lot along the way. It's remarkable to reflect on all the work that went into this. Midnight will push the space forward and provide privacy safely to the masses. It's the natural continuation of what Satoshi promised.
For the first time, artificial intelligence agents will be first-class citizens. When you have a ZK, MPC, and TEE system, you're building a proof system. The language of agents and AI is not verbal; it's proofs. When agents meet, they ask each other to prove things. A ZK system allows this at scale. By combining it with multi-party computation and confidential computer TEEs, we can do this for all applications.
There will be trillions of agents running on the web every year, and Midnight creates the fabric for them to work together and participate in commerce. This goes back to abstraction. You want to tell people what you want to do, and someone has to figure out how to solve it. The solver of the future will be artificial intelligence, and in many cases, you own it. You have an NFT representing it, allowing your AI to interact with others, needing proofs to trust everything.
After all this work and research, we inadvertently created the best framework in the world for agents to operate and achieve their goals. However, we have a lot of work to do. We're making significant progress, but there's much more to accomplish. We will maintain our cadence, pace, and quarterly iterations and upgrades.
Your first touchpoint will be dust generation, followed shortly by dApps. It's guarded, like Aztec and others are doing. It's best practice: don't overdo it, get it out, make those blocks, and ensure consensus. It's the mainnet; we can't mess it up. We need to keep moving forward, gradually lift the guard, and increase expressiveness fork by fork.
On behalf of Input Output Group, allow me to be the first to say, welcome Midnight. While I am Norwegian, I'm also Italian. Everything we do in Italy is done with love. We love all of you, and thank you for allowing us to share our passion over these last 8 years. Welcome to the fourth generation of cryptocurrencies. Blockchains can now keep a secret, and because of that, they become mainstream. Thanks, everyone. I'll see you all soon. Cheers.
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