Three essentials for banking
Banks require three key features from blockchain technology, which public chains often struggle to provide. These are: privacy with selective disclosure, predictable execution without the need for Maximum Extractable Value (MEV) exploitation, and compliance tools that don’t expose sensitive data to everyone.
It’s crucial for banks to keep customer transactions off public ledgers that are accessible to all.
Selective disclosure is necessary to hide private information while still demonstrating compliance when needed.
MEV, or Maximum Extractable Value, is like a hidden cost for public chains.
Validators or bots can access pending transactions in the memory pool and rearrange them for profit before the trades are finalized.
For financial institutions dealing with $2 billion to $3 billion in a single transaction, this is simply unacceptable.
Midnight’s solution
Midnight addresses the need for programmable privacy, allowing transactions to be confidential if desired, while also being verifiable when necessary.
Imagine a hedge fund purchasing $50 million in Ethereum-tokenized bonds. Everyone is aware of the deal, but at midnight, counter-parties can verify the trades and regulators can check compliance, all without the market knowing the positions involved.
Midnight launched its mainnet in March, collaborating with Monument Bank for tokenized deposit processes, with Google and BlockDaemon included as validators.
Benefits of the Cardano ecosystem
Midnight serves as a partner chain in the Cardano ecosystem, integrating several advanced institutional components.
Since its start, Cardano has maintained 100% uptime as the most decentralized proof-of-stake network, facilitated by Layer Zero’s connectivity to more than 80 blockchains.
Moreover, USDX offers stablecoin liquidity fit for institutions, while Pyth ensures access to top-tier oracle data.
This integrated strategy marks a significant shift.
Unlike Ethereum and Solana, which are working to persuade institutions to overlook privacy concerns by building additional layers, Cardano and Midnight are providing a fundamental privacy layer that institutions should incorporate from the outset.
