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Cardano is preparing for the imminent mainnet launch of Midnight, a privacy-focused sidechain, as market data points to extreme negative sentiment toward its native ADA token.
According to Santiment, the average wallet active on the Cardano network over the past year has earned a negative 43% return on its investment. At the same time, Binance funding rates show the largest short position ratio against ADA since June 2023.
With ADA down 71% since September, the token has moved into a range that professional traders often associate with capitulation. In derivatives markets, where positions are effectively zero-sum, the prevailing historical expectation is continued downside—though the setup can also increase the risk of a short squeeze if a catalyst forces heavily leveraged traders to cover.
Midnight is a programmable privacy layer that Cardano developers have been building for more than eight years. The network is targeting a launch later this week and will run with a federated set of node operators that includes Google Cloud, Telegram, Blockdaemon, Shielded Technologies, AlphaTON, MoneyGram, Pairpoint by Vodafone, and eToro.
The timing is framed as important because Cardano’s base-layer activity remains low relative to its market valuation. CryptoSlate data cited in the article puts ADA at $0.2639 as of press time, valuing the token at roughly $9.72 billion. That is 91.5% below its all-time high of $3.09.
The article highlights a gap between ADA’s valuation and the economic activity currently generated by Cardano’s decentralized applications. It states that the network supports $13.93 million in total value locked and $47.62 million in stablecoins. It also cites DefiLlama data showing the chain generated just $1,639 in fees over a recent 24-hour period.
Against that backdrop, Midnight is presented not as a minor add-on, but as an effort to attract institutional-style demand that has not scaled as expected within Cardano’s existing ecosystem.
Unlike classic privacy coins focused primarily on anonymous transfers, Midnight is described as selling privacy for data and execution. The architecture uses zero-knowledge proofs—specifically Plonk and Halo 2—along with multi-party computation and trusted execution environments.
The article says this approach is intended to enable users to prove compliance with regulations without exposing underlying proprietary data. It is positioned as a response to tightened anti-money-laundering requirements that restrict crypto-asset service providers from supporting accounts that use anonymity-enhancing coins to obfuscate transactions.
The article notes that Midnight’s internal mechanics do not route direct usage demand cleanly back into ADA. Instead, it operates with a dual-token model: NIGHT as the public governance asset and DUST as a shielded, non-transferable resource used to pay for transaction fees and smart-contract execution.
Because DUST cannot be traded or sent between wallets and decays if unused, the network’s economic “gravity” is described as sitting within the Midnight stack rather than directly in ADA.
Consistent with that framing, the article says NIGHT recently traded at $0.04816, giving it a market capitalization of $799.9 million and 24-hour trading volumes exceeding $1.01 billion. It also reports that NIGHT was up 17.5% over a 30-day window, while ADA fell 4% over the same period, suggesting traders are using NIGHT as the direct instrument for the compliant-privacy thesis.
The article also cites Cardano founder Charles Hoskinson, who previously argued that Midnight could lift monthly active users and total value locked by expanding utility. It quotes him saying: “Adding Midnight to Cardano supercharges our DeFi ecosystem and will 10x the MAUs, Transactions, and TVL as we are first to market with private DeFi at scale.”
It further states that Hoskinson said it could take six to 12 months to gradually open the full set of capabilities Midnight is meant to support. Later phases are expected to include governance experiments and an incentivized testnet for stake pool operators.
For ADA holders, the article points to recent Cardano infrastructure upgrades as potential rails for external capital. It notes that in February Cardano integrated LayerZero, connecting the blockchain to more than 160 other networks and roughly $80 billion in omnichain assets. It also says a native version of Circle’s USDCx stablecoin went live on Cardano mainnet using the Cross-Chain Transfer Protocol, and that developers are working on native Bitcoin staking on public testnets.
Taken together with Midnight’s launch, the article describes Midnight as Cardano’s clearest growth experiment in years.
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